Part 2: Advertising cutbacks, portal deals and accountability

Have your sales been impacted by nervous advertisers cutting back on their online ads?
Absolutely.

What steps did you take to reduce the impact of the cutbacks?
We started taking steps to lessen the impact in the third quarter of last year. We started going after a different clientele, not the dot com companies, most of which don't even have a business.

You forecasted this early, before it started happening?
Exactly. Because if somebody doesn't have a business model that's sustainable, then you shouldn't spend that much money trying to get them as advertisers. So we started transitioning at an early stage to Nabisco, Xerox, AT& T, Doubleday, Columbia House. These are companies that have been around a long time, and which are now our clients.

When looking at your offline advertisers (brick and mortar companies), are they cutting back on online promotion or are they increasing their expenditure?
Well, they are transitioning. They're getting their feet wet. There's so much advertising inventory available online, they don't quite know where the most efficient use of their ad dollars are.

Where do you their ad dollars would be most efficiently used?
Ha, well, I'm partial to our own media. But the fact of the matter is that these portal deals that were so common two years ago - like AOL, Yahoo, Lycos - have proven to be very inefficient for the advertisers. They were there to create press releases and pump up stock prices, and those deals are going to go by the wayside. They're being restructured on an ongoing basis. And look at Go.com, it's out of business now.

What is dawning is the age of advertising accountability. That just wasn't there before, because these companies had so much money. They were just spending money like water. I believe these (more traditional) offline companies now coming online are more conservative, and trying different things. And they're beginning to demand accountability.

Continued...