It won’t be long before the new company comes knocking at your door. While the AOL-Netscape wedding was about ““eyeballs’’ (audience), this deal concerned a different Internet buzzword, ““bandwidth’’ (speed). Everyone is looking to alleviate the World Wide Wait, but Internet providers are even more interested in using speed to gussy up online advertising and electronic commerce. AtHome uses cable-TV lines to deliver high-speed connections, while most AOL users still poke along on telephone lines. But the real challenge to AOL may be AtHome’s foray into online marketing. The new Excite- AtHome combo has a battery of cutting-edge technologies ready to plaster computer screens with whiz-bang multimedia ads that advertisers and consumers prefer– and only fast pipes can accommodate.
Some surveys, including one commissioned by AtHome, show people to be at least twice as likely to respond to multimedia ads than to ordinary Web banners–those easily ignored strips along the top of Web pages. Tom Jermoluk, AtHome’s chief executive, says the success of such electronic come-ons could one day let AtHome drop its monthly $40 subscription fee: ““The revenue from advertising and e-commerce that results from this deal will dwarf it.''
Provided you have something more than a runty subscriber base. AtHome has only 330,000 users; that’s why Excite, with its 20 million registered visitors, caught AtHome’s eye. Backed by a clutch of cable companies, AtHome may also acquire AT&T’s 2 million Internet users (the telephone giant will soon own a big stake in AtHome). With such an audience, the company can pitch customers goods and services, ultimately letting consumers charge everything from stocks to steaks on the credit-card numbers AtHome already has on file.
The new company now has two advertising wings to carry out this business plan: Narrative Communications, which brings online ads to life with video and sound, and Excite’s MatchLogic division, which tracks users’ behavior to predict purchasing habits and tailor ads to them. As a subscriber reads about home improvement online, he can get hammered with animated ads for tools. That kind of multimedia targeting is an attractive prospect for advertisers.
Of, course, a big Net deal doesn’t guarantee profits–last week’s Internet stock gyrations show just how skittish Wall Street still is toward the industry. For now, fast cable-based Internet access is ““a niche, high-end market for early adopters,’’ says Barry Schuler of rival AOL. Most Internet growth remains across telephone lines. That audience, he argues, ““is still where the money is.''
Seven billion dollars may seem a high price to pay for Excite, a company that hasn’t earned a penny and whose stock is often considered overvalued. Unless, like AtHome, you’re a company that hasn’t made a penny and whose stock may be equally overvalued. Investors seemed to like the AtHome-Excite story anyway, but that’s only the first pitch of many more to come.
