Major Internet Hubs See Lesser Influence

The Associated Press
Sunday, October 7, 2007; 1:48 PM

NEW YORK -- The recent rush by major Internet portals to buy advertising companies and extend their sales networks is a sign that the business of being a one-stop shop for information and entertainment isn't what it used to be.

Gone are the days of emphasizing ways to attract and keep visitors _ the way television networks long have operated _ by creating destinations with anything people might need for work, leisure or companionship.

Instead, those companies are now more aggressively trying to follow Web surfers elsewhere _ and bring lucrative advertising to them.

As people increasingly turn to blogs, social-networking sites and other sources of user-generated media, Google Inc., Yahoo Inc., Microsoft Corp. and Time Warner Inc.'s AOL have spent more than $10 billion collectively this year to acquire companies and technologies that help extend their online advertising networks.

So instead of relying solely on being portals for consumers, the major companies are creating one-stop shops for advertisers, who are increasingly wanting to buy ads centrally and place them where the eyeballs are. The networks take care of feeding the ads to smaller sites.

"We're not interested in building yesterday's portal," said Ron Grant, AOL's president and chief operating officer. "Consumers are finding what they are looking for is coming from more and more fragmented places. We need a way for advertisers to take advantage of that fragmentation."

That shift is important for the major Internet businesses to grab a substantial share of the marketing dollars expected to flow at the expense of television and print.

For consumers, the development means greater freedom and a further erosion of artificial walls designed to keep visitors from leaving sites.

According to comScore Media Metrix, the U.S. audience for the four major Internet brands grew over the past year. But the total time spent at Yahoo and AOL dropped about 10 percent, while Microsoft's MSN-Windows Live services saw an 8 percent decline.

In other words, these sites are attracting more people but are keeping them for shorter durations as users find what they need elsewhere.

Google was the exception, with a 57 percent jump in total time spent, but even the company recognizes that "no individual property will have all those products and services" a user might want, said Tim Armstrong, Google's head of North American ad sales.

"The Internet is basically being built and scaling (faster) than any one property on the Internet is," Armstrong said. "Companies in the Internet space are changing their business models to have models which are consumer driven, not property driven."

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