Firm Awarded Patent On Newspaper Web Ads

By: Carl Sullivan A little-known New York-based ad-placement firm claims that its new patent grants it exclusive rights to serve national advertising to networks of newspaper Web sites from a central location. But some newspaper-industry executives are skeptical.

After being awarded the patent June 4, Global Network Inc. (GNI) began notifying newspapers by e-mail. The company also ran an ad in at least one regional edition of The Wall Street Journal on July 24 and planned to run an ad in today's issue of E&P.

GNI CEO and President James C. Mason said that once newspapers, advertisers, ad agencies, and ad servers are notified, the company expects to receive royalties from anyone who serves ads as outlined in its patent (No. 6,401,075), which was filed for on Feb. 14, 2000. The patent was granted for GNI's proprietary method for obtaining online ads, modifying those ads to meet the requirements of a plurality of different and unrelated newspaper sites, automatically placing those ads, monitoring the success of the placed ads, and modifying the ads and their placements to meet the dynamic goals of an advertising campaign.

Mason said the New York Daily News will be the first paper to buy a licensing agreement, but that could not be confirmed at E&P's press time Friday. Mason was a sales vice president at the Daily News in the late 1980s.

GNI's patent would seem to apply to any number of newspaper Web site networks such as Knight Ridder's or the Tribune Co.'s, neither of which responded to requests for comment. The royalties could be significant. The Interactive Advertising Bureau tallied $7.2 billion in Web advertising last year. Newspaper sites probably accounted for about $350 million of that sum, said Peter Krasilovsky of Borrell Associates.

"Our attorneys have looked at it and are not concerned," said Michael Romaner, president of Morris Digital Works, based in Augusta, Ga. He added that 24/7 Real Media, which provides ad-serving technology to Morris, has told him not to worry about it. "We're not losing a moment's sleep," Romaner said.

Real Media founder Dave Morgan, who now runs Tacoda, an audience-measurement firm in New York, had harsher words for GNI. "I'm highly suspicious of anyone who makes such broad patent claims in an area where many companies have been doing a lot of work for many years," he said. "Many billions of online ads have been placed on newspaper Web sites starting as early as 1994. They're trying to use some broad patent claims to pump up the price of [their] stock."

Founded in 1998, GNI went public a year later. It was trading at 42 cents a share in the over-the-counter market Friday morning. In filings with the Securities and Exchange Commission, the company reported revenue last year of $201,691, all from the sale of online ads on newspaper Web sites.

GNI built a database of information about more than 1,000 newspaper Web sites, including specifications for ad placement. "We know, for example, how many papers can accept skyscraper ads in their sports sections," said GNI Chief Information Officer Dennis Stillwell. The company uses that information to place ads for national advertisers across newspaper Web sites, acting as a middleman between national advertisers and publishers. "We get one creative in from the ad agency, and we reconfigure it to be compatible with 30 different sites," Mason said.

"It's one bill, one purchase for the advertiser," said Paul Benjou, director of client services for San Francisco-based Mediaplex, an online ad-serving company that works with GNI. "Agencies don't have to go to multiple sites to make deals. It saves time and a lot of legwork." Benjou said GNI would deliver several large national campaigns to newspaper sites this month.

GNI is also a partner with Vertis Inc., the advertising firm in Baltimore. "GNI fits into what we do because they allow us to augment a [print] newspaper insertion buy with online advertising," said Richard Clayton, Vertis' director of professional services, based in Clifton Park, N.Y. So far, the two companies have collaborated on only a few small campaigns.

Over all, GNI says it's sold dozens of national campaigns across major newspaper sites. In January of last year, GNI sold ads for MeetSomeone.com across newspaper sites in 90 markets, and campaigns for American Express have run several times in 10 to 15 markets, Mason said. "We have about 50 [requests for proposals] pending with the [Newspaper National Network]," Mason said.

The NNN, which sells national advertising into print newspapers, agreed in April of last year to sell online newspaper advertising through the GNI system. NNN President Nicholas Cannistraro Jr. wouldn't comment on GNI last week, but in April 2001 he called the partnership "a perfect marriage" between print and online ad sales in an interview with E&P Online.

NNN is an affiliate of the Newspaper Association of America, which also had no comment on GNI, although a representative confirmed that the trade group has had informational meetings with the company about its patent.

Mason said he's confident that no one was serving ads in this way before GNI filed for its patent. "We had a meeting at NAA's Vienna [Va.] offices back in January with about 30 papers, and we asked if anyone had this capability," he said. "No one said they did."

Jeff McFadden, a patent attorney with the Greensboro, N.C., office of Womble Carlyle, said that it's up to GNI to enforce its patent, which could be an expensive proposition for a small firm. "It's going to be a significant expense to take on the big boys in the newspaper-publishing industry," he said.

But John Conklin of Leydig, Voit & Mayer in Chicago pointed out, "It's not an easy task to invalidate a patent."