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Not just banner advertising
Dot-coms make new move

By Eva Ling, Eric Leung & Arith Leung

Despite the dot-com vogue in the past few years, not many dot-coms break even.

Many dot-coms struggling to survive in the market have to diversify their revenue models due to keen competition.

The main source of revenue for web sites is banner advertisements.

Yet, banner advertising is ineffective in generating revenue.

According to a survey of 200 university students from the seven universities in Hong Kong conducted by Varsity in November 2000, about 25.8 percent of university students paid attention to banner advertisements on the web.

Among them, about 53.1 percent clicked on the banner advertisements.

HKcyber.com is one of a successfully run Internet company that does not rely on banner advertising as its main source of revenue.

It applies various forms of advertising on the web.

A user may be directed to play an online game whenever he clicks on an icon for advertisement.

Mr. Wong Yuk Man is the chairman of HKcyber.com.

He said that this promotion strategy is intended to deepen users’ impressions of the products.

This promotion technique is also being used by Siemens and Carlsberg.

Another technique is similar to promotional video which is specially designed for restaurants and food stalls.

Mr. Wong said that a video is produced for each restaurant on the web in addition to banner advertisements.

The cuisines of the restaurants are introduced and tasted by Mr. Kent Cheng, an actor in the film The God of Cookery.

Miss Cindy Lee is the public relations manager of Sina.com.

According to her, advertising generates about 90 percent of the company’s revenue.

Miss Lee said that banner advertising is not so effective.

Yet, she believed banner advertisements are still worth posting.

Said she: “They are just like traditional television commercials, which still have a number of supporters.”

Like HKcyber.- com, Sina.com has applied new promotion strategies.

“We conduct surveys for advertisers,” Miss Lee said. “We send questionnaires to  members via e-mail.

“This enables advertisers to gather useful information about their target customers as well as promote their products at the same time.”

Apart from conducting surveys, Sina.com  also sends newsletters and electronic cards to members as a kind of advertising.

Mr. Rudy Chan is the chief executive officer of Hongkong.com.

He agrees that banner advertising is not enough to drive transactions and loyalty.

“Banner advertising is good for generating exposure, branding and imaging,” said Mr. Chan.

To facilitate advertising, Hongkong.com catergorises their clients.

Whenever users subscribe to certain advertisement categories or newsletters, e-mails are sent to them providing the latest information about the goods and services they want.

Hongkong.com also operates auction sites for its advertising clients.

Said Mr. Chan: “We hosted an auction for Heineken. The currency used for the auction was Heineken caps instead of money.

“Using Heineken caps as the currency  drove users to buy the beer.

“On the other hand, people may link to our site after the campaign.”

According to Miss Lee of Sina.com, most advertisers are online companies.

In assessing the difficulties of online advertising, she said online advertising is rare for traditional businesses like fashion boutiques and fast-food outlets.

Said Miss Lee: “Some clients like Coca-Cola, Reebok and Nike have now started placing online advertisements.

“However, their online advertising billing is low and they are just putting online advertising to the test.”

Another difficulty in online advertising is the shifting of markets.

Many advertisers have shifted their advertising expenditures to the mainland.

Hence their ad spending is decreasing in the local market.

To attract viewership, Internet companies have to provide different types of information.

Said Mr. Chan of Hongkong.com: “On the Internet, the packaging of the content, rather than the content itself, is most important.”

He said that the labour costs would be very heavy if they produced the content themselves.

Hence, Honghong.com relies on other Internet companies to provide it with a large variety of information.

Said Mr. Chan: “Most of our content is freely provided by other sites or they may pay us to put their content in our site.

“And information on e-mails, chatrooms and message boards are provided by our users instead.”

HKcyber.com is trying to gain the support of people from different walks of life.

It provides a large variety of information about horse racing and the stock market.

Since December 2000, HKcyber.com acquired the Internet live broadcasting rights for Macau’s horse and dog racing.

Users do not need to pay to view the races, but it charges Macau Jockey Club a broadcasting fee.

HKcyber.com also shows movies and has online courses on the web to meet the needs of different people.

To generate revenue, HKcyber.com sells its content to other organisations and provides most of Orange’s WAP phone content.

Besides, it sells rights to broadcast video on demand programmes to make money.

Faced with keen competition among dot-coms, Sina.com also is trying to enlarge its share by providing various services.

It offers various types of Internet games such as online mahjong and chess games to users.

Besides, it provides members with a 50-megabyte e-mail account. It is the pioneer in providing such a service.

Sina.com also organises different online clubs for members. Users chat on topics in which they share interest.

It also provides a user-friendly search engine for members.

Other than providing various types of information, Sina.com has promotional strategies that have generated interest in the industry.

It created a cartoon character called Sinaman instead of using celebrities to promote its web site.

Said Miss Lee: “Using celebrities is expensive and is subject to negative news.”

To survive, advertising revenue alone is not enough.

All three Internet companies are concerning about the development of e-commerce.

Hongkong.com has Shop4U, The Avenue and Cyber City. These are online shopping areas.

In the future, it will provide more on-line-off-line shopping choices for its users.

This means that the whole transaction will not be done only on the web.

For Hkcyber.com, there is an auction section on its web site.

According to Mr. Wong of HKcyber.com, the auction section is not aiming at earning money.

“It is just to familarise people with online consumption. This is beneficial for e-commerce to take place.”  

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