IBM: The End Of Advertising As We Know It

IBM Global Business Services unveiled its new report, “The End of Advertising as We Know It,” forecasting greater disruption for the advertising industry in the next five years than occurred in the previous 50.

To examine the factors influencing advertising and explore future scenarios, IBM surveyed more than 2,400 consumers and 80 advertising executives globally. The IBM report shows increasingly empowered consumers, more self-reliant advertisers and ever-evolving technologies are redefining how advertising is sold, created, consumed and tracked.

Traditional advertising players risk major revenue declines as budgets shift rapidly to new, interactive formats, which are expected to grow at nearly five times that of traditional advertising. To survive in this new reality, broadcasters must change their mass audience mind-set to cater to niche consumer segments, and distributors need to deliver targeted, interactive advertising for a range of multimedia devices. Advertising agencies must experiment creatively, become brokers of consumer insights, and guide allocation of advertising dollars amid exploding choices. All players must adapt to a world where advertising inventory is increasingly bought and sold in open exchanges vs. traditional channels.

“Digital entertainment is experiencing faster adoption than anyone had previously anticipated. The advertising community needs to dramatically re-orient its business to serve consumers who increasingly access content in non-linear formats,” said Bill Battino, Communications Sector managing partner, IBM Global Business Services. “Companies must re-look at how they serve content to consumers with business models based much more on engaging consumers in a relationship.”

The report observes four change drivers tipping the advertising industry balance of power: control of attention, creativity, measurement, and advertising inventories. As shown in IBM’s global digital media and entertainment consumer survey released in August, consumers’ attention has shifted, with personal Internet time rivaling TV time. Consumers have tired of interruption advertising, and are increasingly in control of how they interact, filter, distribute, and consume their content, and associated advertising messages. IBM’s survey findings demonstrated that half of DVR owners watch 50 percent or more of programming on re-play, and that traditional video advertising doesn’t translate online: 40 percent of respondents found ads during an online video segment more annoying than any other format. Amateurs and semi-professionals are increasingly creating low cost advertising content that threatens to bypass creative agencies, while publishers and broadcasters are broadening their own creative roles. Advertisers are demanding accountability and more specific individual consumer measurements across advertising platforms. Self-service advertising exchanges are attracting revenues that were once exclusively sold through proprietary channels or transactions.

Advertising Experts’ Expectations in Line with Global Consumer Trends

IBM’s research found that advertising experts recognize the changing nature of consumers and also anticipate dramatic changes on the horizon. More than half of ad professionals polled by IBM expect that in the next five years open advertising exchanges (currently led by companies like Google, Yahoo, AOL) will take 30 percent of current revenues now commanded by traditional broadcasters and media. Nearly half of the advertising survey respondents anticipate a significant (greater than 10%) revenue shift away from the 30-second spot within the next five years, and almost 10 percent of respondents thought there would be a dramatic (greater than 25 percent) shift. Two-thirds of advertising experts surveyed by IBM expect 20 percent of advertising revenue to move from impression-based to impact-based formats within three years.

Saul Berman, IBM Media & Entertainment Strategy and Change practice leader, said, “Advertising remains integral to pop culture and continues to fund a significant portion of entertainment around the world. But it needs to morph into new formats and offer more intrinsic value to consumers, who will have more choices. The wealth of new advertising outlets means consumer analytics will have a more prominent role than ever regardless of where you reside in the value chain. Young people in particular have grown accustomed to not paying for content. Despite greater consumer control over content and advertising, we envision a world where consumers will continue to prefer to view advertising rather than pay for content directly.”

The report indicates by 2012, the landscape of the industry will change so profoundly that to survive, advertising industry players need to take aggressive steps to innovate in three key areas:

• Consumers: making micro-segmentation and personalization paramount in marketing;
• Business models: how and where advertising inventory is sold, the structure and forms of partnerships, revenue models and advertising formats;
• Business design and infrastructure: All players need to redesign organizational and operating capabilities across the advertising lifecycle to support consumer and business model innovation: consumer analytics, channel planning, buying/selling, creation, delivery and impact reporting.

IBM believes that all players will need to invest heavily in consumer analytics and automation to gain more insights about the consumer and how to reach them. For example, interactive advertising paired with consumer analytics provides compelling knowledge of who viewed and acted on an ad rather than estimates of impressions, allowing advertisers to maximize revenue and yield management. Industry players will also need to examine if they have right resources and capacity to handle increased marketing promotions and integrated advertising sales. Finally, IBM observes that the dramatic increase in both the number and variety of promotions is leading to greater investment in tools to digitally transform and reduce the cost of companies’ workflows including content management, creative development, production and sign-off processes.

Download the research here

Ad Networks Are the New Dot-Coms

By Saul Hansell

 

It’s no longer enough to have a Web site. Blog software let absolutely everyone into that club. Now the way to fame and riches seems to be starting an advertising network.

In just the last two days, Martha Stewart Omnimedia, BuzzMetrics and ZoomInfo all said they would start ad networks. Most significantly, Facebook is preparing to start one that draws on the information it has about users.

Meanwhile, the existing networks are expanding. AOL just agreed to buy Quigo, which helps publishers sell advertising on their own sites. And Google, the biggest ad network by far, said it would start putting ads into videogames.

Martha Stewart has started Martha’s Circle,” a network that includes Apartment Therapy, 101 Cookbooks, Style Me Pretty and other sites that are “Martha-like in their aspirations and interests,” Wenda Harris Millard, the president of Martha Stewart Omnimedia, told Advertising Age.

For Martha, this is a way to leverage the company’s existing sales force and attract more attention from marketers because it can offer
them more reach.

Other sites are morphing their own business models to tap into the ad network craze. For example, ZoomInfo, a company that started out as a search engine for information about people, is now planning to use the data it gleans about people in a targeted ad network.

BuzzLogic is going the other way, trying to use software originally designed to help marketers find influential bloggers for advertising purposes. Its new ad network is meant to put advertisements next to discussions related to what they are trying to sell. Mortgage lenders, for example, can advertise on blogs talking about home buying.

Prediction 1: We’ll see dozens more ad networks announced in the next six months.

Prediction 2: 95 percent of them will be gone in two years.

Everyone who has ever sold advertising says that buyers like things to be simple. And the plethora of competing networks and technologies is anything but. Google has already proven that there is a powerful network effect to advertising. The more buyers and sellers in one place, the better prices for all.

Yes, there are some who argue that the rise of advertising exchanges, like Yahoo’s Right Media, will help make the market efficient for lots of players. That could be, but I’ll still stand by the idea that Google and a handful of others will end up with the vast bulk of the ad network business.

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Hulu.com Launches Private Beta, Makes Very Good First Impressions

News Corp. and NBC Universal are certainly banking on it.

After seven months of preparations, delays and wisecracks about its quirky name, the two companies are finally lifting the veil Monday on their new Internet video service, Hulu.

Hulu programming will begin appearing Monday at the Web sites of its distribution partners, such as News Corp.’s MySpace, Yahoo!, Time Warner portal AOL, Microsoft site MSN and Comcast.

And Hulu.com, which will have additional features that won’t be available at the partner sites, is launching a private beta test Monday. The beta will start with a few thousand users who register their e-mail addresses at the site and will gradually expand its reach in the coming months.

It’s the latest and most ambitious effort by the television industry to reach viewers online. But in some respects, it’s also the most perplexing.

In addition to distributing content at leading portal sites, Hulu is also establishing a brand-new destination site at Hulu.com – not a simple task in an increasingly crowded online video market. Moreover, it will be competing for traffic with its owners’ other Internet properties, such as Fox.com and NBC.com.

Finally, Hulu will be run as a joint venture between two hard-nosed competitors, raising inevitable questions about whether or how News Corp. and NBC Universal, which is owned by General Electric, will play nice with each other.

But such concerns don’t appear to bother private-equity firm Providence Equity Partners, which has just invested $100 million in Hulu. And Hulu Chief Executive Jason Kilar, a former senior executive at Amazon.com, downplayed potential worries about the JV dynamic.

“This could not happen without their commitment,” Kilar said. “I feel very proud to say how they’ve come together.”

Hulu provides a vivid illustration of how much TV network attitudes have changed – and not changed – since YouTube crash-landed on the entertainment landscape two years ago.

While the networks were initially hesitant about making their programming available online, Fox, NBC, CBS, Disney’s ABC and Viacom all do so today to varying degrees. Hulu represents the latest step in these efforts.

Hulu and its distribution partners will feature streaming video of full-length prime-time programming and clips from Fox and NBC, as well as content from sibling networks such as Bravo, Sci Fi, FX and Fuel TV and USA Network. CNET, E! Entertainment Television and Sundance Channel will also provide programming.

All Hulu content, including movies, will be viewable free of charge and supported by advertising. Full-length TV shows and movies will open with a “brought to you by” title card that will appear for several seconds. Once the programming gets under way, a banner ad will rest at the top of the screen unless a viewer chooses the full-screen video option. In addition, about two minutes of video advertising will be inserted every 22 minutes or so.Clips and other short-form video will also feature a banner ad at the top of the screen, as well as overlay ads that will periodically appear at the bottom of the screen but won’t interrupt the flow of the programming. The overlay ads can be clicked for more information about the sponsor.

Hulu.com will have extra features not initially available at its distribution partners’ sites, including the ability to e-mail links to full episodes and whatever portion of an episode a viewer chooses to share.

Hulu.com visitors will also be able to embed full episodes and clips on their own Web sites and blogs. Embedded programming will retain all advertising. It’s a somewhat daring move, given the potential squeamishness that advertisers may feel about where their marketing messages will end up appearing.

All of these features illustrate how eager News Corp. and NBC are to reach viewers online. But in other ways, Hulu also demonstrates the degree to which the companies want to retain control over how consumers view and make use of their content.

For instance, contrary to what News Corp. and NBC indicated when they first announced their plans in March, Hulu won’t enable viewers to create mashups of its programming. Nor will it accept uploads of user-generated videos. Instead, Hulu has assigned part of its team to create clips and video “montages” for users.

Why impose such restrictions? “We’re very focused on premium content,” Hulu’s Kilar said.”We’re not seeking to have a user-generated content service. There are many other services out there. …We want to [break] new ground, as opposed to ground already being served by other companies.”

But shifting more power to consumers has been part of the core appeal of YouTube and other video sites. Differentiation from the competition is fine, but when the competition is eating your lunch in terms of traffic, taking a page from their playbook probably wouldn’t hurt either.

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Hulu is still a joint venture exclusively between NBC Universal and News Corporation. It exists as a website through which users can stream a collection of TV shows, movies, and short clips on-demand for free without any limits on how many times you can view each video. Hulu also exists as a distribution network of premium content for several partner websites - AOL, MSN, MySpace, Comcast, and Yahoo - that will display Hulu’s videos for free but in their own branded players. In addition to these partnerships, users themselves form a viral distribution network of sorts since Hulu allows its videos to be embedded in any website and shared via email. Hulu makes money in all cases from advertising, which it displays in and around the videos it serves.

A couple of things that Hulu is not: a repository of user generated content like YouTube or a download service like iTunes Store. All of the video on Hulu is premium content and users don’t have access to any uploading capabilities. TV shows and movies can only be streamed through Hulu or one of its partners’ Flash players, not downloaded to your desktop or portable media player. While it’s understandable that NBC and News Corp. want to focus exclusively on premium content, it’s a shame that we can’t (yet) download videos from Hulu (either in an ad-supported format or for a fee). Perhaps this is something to look for in the future, although company representatives were mum on whether they had plans for it.

As for the content on Hulu, TV shows will come from Fox and NBC, and over fifteen cable channels including Bravo, E!, FX, SciFi, Sundance, and USA. Movies will come from Fox and Universal, and following a deal signed just this Friday, from Sony and MGM as well. Hulu says many of its short clips will come from independent content providers, and it’s also signing licensing deals with others such as Smithsonian and the WWE. Overall, Hulu’s collection is impressive and we can anticipate seeing it grow even more in the coming months. Representatives say that they will listen to consumer demand to determine which shows and movies to add next. Click here to view a full list of the videos currently in Hulu’s collection.

In terms of availability, Hulu as a website will not be available to the public for another few months. Its collection, however, will be rolled out on its partners’ websites over this coming week so we can expect to see most, if not all, of Hulu’s content on AOL, MSN, MySpace, Comcast, and Yahoo very soon. Just when particular videos will be available through Hulu - and how long we can expect them to stay on Hulu - will vary from video to video. However, as a general rule TV shows will be available on Hulu by midnight Hawaii time after they debut on normal television. As another general rule, Hulu will keep distributing TV shows until five weeks of newer episodes have passed, at which point older shows will presumably just disappear from the site.

This is Hulu’s greatest weakness. Try as it might, it has not yet escaped the programming mentality of broadcast television. Hulu still imposes a schedule of sorts on Web viewers, even if that schedule comes with a five-week window of flexibility. But on the Web, five weeks may not be enough. Appointment TV just doesn’t make sense in a medium where time slots are thrown out the window and the available inventory of videos is counted in the millions. Hulu may be limiting its appeal by not keeping all of its videos up indefinitely (who knows when a particular video clip could take off as the next viral hit?). It also will be interesting to see how this limit affects embedded TV shows, which may just stop functioning after too much time. Similarly, movies and short clips will be added and removed from the site in an undisclosed (or uncertain) manner, although Hulu reps say they will try to add movies that are in demand. Hulu will not only have new releases but older movies as well, and only ten movies will be available to start.

Now for the design and features of Hulu.com itself. First of all, the experience is entirely browser-based so there is no software to install beyond Flash player, which you probably already have. Hulu has done a good job keeping the user interface simple and highlighting the actual content of the site. The homepage highlights a given video and lists the most popular episodes, the most popular clips, and recently added videos. You can also search Hulu’s entire collection from the homepage. Other sections of the site list the available episodes for particular shows and let you browse videos by network/studio, alphabetical order, or popularity. On your user profile page, you can create a video playlist and check your viewing history. Both your viewing history and playlist can be shared via RSS which, in addition to user reviews that you can leave at the bottom of video pages, form pretty much the extent to which Hulu.com incorporates social features.

The videos themselves are streamed at either 480kbps or 700kbps depending on your bandwidth, and Hulu is working with Adobe to provide even higher resolutions through Flash Player 9.2 by the end of the year. Hulu’s video player sports all the basic features we see in embeddable players these days: sharing via email, embedding via HTML, video details, full screen, seeking, and volume. It also has buttons with which users can submit feedback directly to Hulu, pop the video out into its own window, darken the rest of the page for better viewing, and vote the video up or down. Perhaps the coolest feature of the player is the ability to select just a segment of the video to share with friends or embed on your website. Embedded videos have fewer features, but users can still share and embed videos that have already been embedded, which should really help to spread Hulu’s videos virally (and make it less popular to embed low-quality versions hosted on YouTube). But, again, if the embedded video expires or is replaced with new content that the embedder did not choose, that could end up backfiring on Hulu.

Finally, some important information about how Hulu plans to advertise. Advertising will be much less intrusive than on actual television. Ads will be served in a variety of ways: banners that display alongside videos, text blurbs that overlay the bottom of videos, and in-video clips that play before, within, and after videos. Shorter videos will tend to have overlays and banner ads, whereas longer videos will tend to play in-video commercials. Hulu says that for longer videos, the total playback time dedicated to advertisements will be drastically lowered, perhaps constituting only 25% of the time you’d spend watching ads on TV. Thus, for every 30 minutes of video, you may only see 2 minutes of ads, whereas on TV you would see 8 minutes. If this is true, then Hulu will certainly be more consumer-friendly than TV. However, that is still probably more commercials than people are used to when watching video on the Web.

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Marketers Explore New Virtual Worlds: Some Create Own As Second Life Site Loses Some Luster

Marketers have figured out they need to get their own lives.

A year ago, online virtual world Second Life was being hailed as the next big digital-marketing phenomenon. But it has begun to lose some of its luster. Put off by high costs and uncertain returns, marketers who had rushed to establish a presence in the three-dimensional online computer game are beginning to look elsewhere. Some are trying other virtual worlds with names like Gaia Online, Zwinktopia, Stardoll and Habbo. Others, particularly in the entertainment industry, are creating their own virtual worlds that fans visit via a brand’s Web site.

“This is now a category rather than a single phenomenon . . . . We’ve moved beyond just Second Life,” says Reuben Steiger, chief executive of Millions of Us, a Sausalito, Calif., company that builds campaigns for marketers in virtual worlds. Ad-holding giant Omnicom Group recently took a significant minority stake in Millions of Us, citing expectations that consumers increasingly will tap the Internet via virtual worlds.

Take, for instance, television network CW’s new drama “Gossip Girl,” about prep-school students living in Manhattan’s Upper East Side. To promote the show, CW’s half-owner, Time Warner’s Warner Bros., worked with Millions of Us to build a virtual Upper East Side neighborhood, where users can shop on Madison Avenue or see the school that characters from the show attend. The world, which just recently opened, uses the same underlying technology as Second Life, but visitors enter through the “Gossip Girl” Web site.

The shifting sands of virtual reality show how hard it is for marketers to keep pace with fast-changing consumer habits on the Internet. Second Life, where visitors use special software to create digital alter egos, looked like an ideal world for marketers a year ago. Consumers on the site were paying real dollars in exchange for virtual goods and services. Advertisers had been caught by surprise by the popularity of social-networking Web sites like MySpace and Facebook, and didn’t want to miss out again.

“There is always this pressure of saying we weren’t early enough on MySpace. We weren’t early enough on Facebook . . . . Suddenly there is this herd mentality and people are doing it because they feel like if they are not there they are missing out,” says Marc Schiller, chief executive of digital-marketing shop Electric Artists.

Companies ranging from Coca-Cola and Anheuser-Busch to Kraft Foods and Nissan showed up on Second Life with virtual marketing campaigns. Retailer American Apparel built an outlet selling virtual clothing mimicking the apparel it sells in the real world.

But despite intense media attention, Second Life has failed to draw significant amounts of traffic. The number of U.S. unique visitors to the site who used the software application that’s necessary to interact in the virtual world numbered 235,000 last month, according to comScore Media Metrix, compared with 207,000 in March. In comparison, IAC/InterActive’s Zwinktopia registered 4.4 million unique U.S. visitors last month, while Ganz USA’s Webkinz registered six million unique visitors.

Marketing executives who’ve spent time on Second Life say the need to download special software, and difficulties in getting around in the virtual world, were off-putting. (Some virtual worlds, such as Second Life, require software downloads; others don’t.)

Furthermore, executives said that there wasn’t enough to do in Second Life. “I’m like most people with Second Life. I became a member to check it out and never went back,” says Eric Hirshberg, chief creative officer of Interpublic Group’s Deutsch LA.

Digital-marketing executives say they had a hard time justifying the tens of thousands, or sometimes hundreds of thousands, of dollars needed to build and maintain a campaign in the virtual world when there were few ways to measure return on investment. The result: Some marketers are retreating. American Apparel closed its virtual shop. Other marketers simply abandoned their promotions or stopped putting money into their Second Life installations.

Chris Collins, chief aide to the CEO at Linden Lab, which owns Second Life, says that marketers need to understand the Second Life community in order to create successful campaigns. “A year ago the book on how to market in a virtual world was completely blank,” Mr. Collins says. “What is starting to happen now, is that the first couple chapters of how to market in a virtual world are starting to be put into place.”

Indeed, marketers are continuing to experiment with virtual worlds — but on a wider range of sites. To promote its Summer Slam pay-per-view wrestling event, World Wrestling Entertainment launched its first virtual-world promotion on Gaia Interactive’s Gaia Online, a community site with anime and videogame discussions, among other features. Gaia Online registered 1.3 million unique U.S. visitors last month, according to comScore Media Metrix. Five days before the Summer Slam event, “bad guys” from the WWE showed up and took over the site. During the week, Gaia users “fought off” the bad guys. WWE says it was pleased with the campaign and plans to continue marketing through virtual worlds.

“People have been ignoring the fact that there are 12 other virtual worlds out there that have hundreds of thousands of visitors,” says Jonathan Nelson, special adviser to Omnicom CEO John Wren. “My bet is this stuff is here to stay.”

Source: Wall Street Journal

MySpace to Discuss Effort to Customize Ads

By BRAD STONE

Members of the booming social network Web sites treat their individual profile pages as a creative canvas for personal expression.

The social networking companies see those pages as a lush target for advertisers — if only they could customize the ads. Although Internet companies have talked about specifically aiming their ads since the inception of the Web, so far advertising on social networks has been characterized by mass-marketed pitches for mortgages and online dating sites.

But MySpace, the Web’s largest social network and one of the most trafficked sites on the Internet, says that after experimenting with technology over the last six months it can tailor ads to the personal information that its 110 million active users leave on their profile pages.

Executives at Fox Interactive Media, the News Corporation unit that owns MySpace, will begin speaking about the results of that program this week. They say the tailoring technology has improved the likelihood that members will click on an ad by 80 percent on average.

“We are blessed with a phenomenal amount of information about the likes, dislikes and life’s passions of our users,” said Peter Levinsohn, president of Fox Interactive Media, who will talk about the program at an address to investors and analysts at a Merrill Lynch conference in Los Angeles on Tuesday. “We have an opportunity to provide advertisers with a completely new paradigm.”

MySpace’s rival, Facebook, also says it is experimenting with ad customization with the help of Microsoft, which signed with the up-and-coming social network last year to provide display ads on the service. To the consternation of privacy advocates, who say Internet users are unaware of such activity, the social networks regard these detail-stocked profile pages as a kind of “digital gold,” as one Fox executive put it last year.

The companies hope that customizing ads to their members’ stated enthusiasms will improve the effectiveness of the ads and recruit new advertisers who want to pitch their messages to refined slices of the online audience. Fox executives also hope the technology can help MySpace recapture some of the momentum and attention that has recently gone to Facebook.

Richard Greenfield, the managing director of Pali Research, predicts that MySpace’s fledgling program will help increase MySpace’s current revenue to $70 million a month from $40 million a month by next year.

“This is a critical evolution of the MySpace business model envisioned from the day News Corporation bought it,” Mr. Greenfield said.

A 100-employee team inside the Fox Interactive Media offices in Beverly Hills, Calif., called the “monetization technology group,” has designed computer algorithms to scour MySpace pages. In the first phase of the program, which the company calls “interest-based targeting,” the algorithms assigned members to one of 10 categories that represents their primary interest, like sports, fashion, finance, video games, autos and health.

The algorithms make their judgments partly on certain keywords in the profile. A member might be obvious by describing himself as a financial information enthusiast, for example. But more than likely the clues are more subtle. He might qualify for that category by listing Donald Trump as a hero, Fortune magazine as a favorite publication or “Wall Street” as a favorite movie.

The system also looks at the groups members belong to, who their friends are, their age and gender, and what ads they have responded to in the past. “Our targeting is a balance of what users say, what they do and what they say they do,” said Adam Bain, executive vice president for production and technology at Fox Interactive.

MySpace evidently does not completely trust the technology. Every two weeks, teams of five “relevance testers” come to Fox Interactive’s offices to manually check member profiles against the categories they have been assigned to.

The company said that several national advertisers are trying out the service, though they declined to name them. Fox Interactive executives say that some kinds of ads benefited more than others. Clicks on tailored auto ads more than doubled and clicks on music ads jumped by 70 percent.

For the last two months, Fox Interactive has also experimented with the second phase of its targeting program, called “hyper targeting,” in which it further divides the 10 enthusiast categories into hundreds of subcategories. For example, sports fans are divided into subgroups like basketball, college football and skiing, while film enthusiasts are further classified by their interest in genres like comedies, dramas and independent films, and even particular actors and actresses.

For now, Fox’s advertising sales representatives are selling the new kinds of ad abilities. In November, according to Michael Barrett, Fox Interactive Media’s chief revenue officer, the company will set up an automated online system to allow smaller companies to aim at MySpace users with their ads without ever talking to a human being at Fox.

A punk band performing in Seattle, for example, could publicize a performance by looking up all the people on MySpace who live in that area who are punk fans.

MySpace also plans to give its advertisers information about what kind of people its ads have attracted. “We want them to leave knowing more about their audience then when they came into the door,” Arnie Gullov-Singh, vice president for product management at Fox Interactive Media.

That is precisely the goal that worries some privacy advocates. They argue that users of social networks like MySpace and Facebook are not aware they are being monitored and that current ad-targeting is only the first step in what has become a huge arms race to collect revealing data on Internet users.

“People should be able to congregate online with their friends without thinking that big brother, whether it is Rupert Murdoch or Mark Zuckerberg, are stealthily peering in,” said Jeff Chester, executive director at the Center for Digital Democracy in Washington.

His organization will ask the Federal Trade Commission, during a planned hearing on Internet privacy in November, to investigate social networks for unfair and deceptive practices, he said.

MySpace and Facebook executives argue that they are harming no one. They say that they are using information their members make publicly available, and contrast their ad targeting with efforts by Yahoo, America Online and Microsoft, whose advertising technologies follow people around the Web and try to deduce what they are interested in based on what sites they are looking at.

Fox executives also say they are planning on letting users opt-out of the ad-targeting program on MySpace, though it means those members will see fewer relevant ads.

At least one MySpace member has no problems with the new technology. Mark Gong, a 26-year-old photojournalist from Washington, runs the 3,000-member Wanderlust group on MySpace and on his profile expresses an interest for foreign films like “Lost in Translation” and “The Spanish Apartment.” Not surprisingly, that has defined him as a prime target for travel ads on MySpace from companies like ShermansTravel.com, a travel deal site. “I’m not opposed to advertising,” Mr. Gong said. “They have got to make money.”

But he also says he hopes MySpace spends the extra cash on making the site more reliable and fending off the Facebook threat. He says many members of his group have flocked to Facebook in the last two months and that even he is logging into Facebook more often.

“Everybody I know is switching to Facebook,” he said. “MySpace has its work cut out for it.”
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