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P&G is online, but the Web isn't crazy about the terms

In late April, when Procter & Gamble Co. finally began advertising on the World Wide Web, it seemed like good news for cyberworld: Support from America's No.1 advertiser gave the Web new credibility with business. In retrospect, though, the online world might wish P&G had bided its time a bit more.

Procter has gotten some of the Web's most popular publishers to junk their usual approach to ad payment, say the companies that turned down P&G's deal. In a test arrangement, instead of compensating online companies for each consumer who sees a P&G ad, P&G will pay only when the online customer "clicks" from that ad to one of P&G's own Web sites. This means that Yahoo!, a major online provider that agreed to P&G's terms, won't make any money if a customer sees a spot promoting P&G's SunnyDelight juice drink unless the customer moves on to its Sunny Delight Web site, which has a game with various prizes.

FOLLOW THE LEADER. P&G and Yahoo! won't comment on their deal's terms, although Yahoo! says it does have some input into the ads. But nearly everyone agrees that P&G's ad deals mark a major departure from TV and print advertising practice. That's because they leave publishers dependent on the quality and effectiveness of the advertising.

If other advertisers decide to follow P&G's lead, Web publishers such as Yahoo!, Excite, and Lycos could see their ad revenue growth stunted. WebTrack Information Services says that only 1% to 2% of Web ads on these popular services interest cybersurfers enough for them to want to take a closer look. "People think Yahoo! has put a stake in the heart of the industry" by agreeing to P&G's terms, says William Townsend, vice-president for advertising at Lycos, which turned P&G down.

Yahoo! sales director Anil Singh calls that "very stagnant thinking." Others, however, contend that P&G is getting something for nothing: the exposure of its brand names to all who see its banner ads, whether or not those cyberspace visitors click to one of P&G's Web sites.

Some ad experts believe the real advertising potential of the Web lies in sites that target users more narrowly. Even Procter relented on its pricing demands when it signed on to advertise with iVillage Inc.'s Parent Soup, a site directed at parents, and it is exploring the possibilities of developing new content with iVillage. But new venue or no, even in this corner of cyberspace the mighty marketer seems to be calling the shots.

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