IntelliTXT founder fields questions about whether contextual keyword ads cross the editorial-advertising line -- even if users like them.

It’s a bit like 'West Side Story' for publishers. IntelliTXT, a new ad format that launched earlier this week, is putting the Jet/Shark division between editorial and ad sales to the test by unifying them. Dubbed "contextual keyword advertising" by the founder of Vibrant Media, IntelliTXT met mixed reactions when it became available to the public.

On one hand, IntelliTXT is a clever amalgam of search keyword and contextual advertising. Editorial content appears as usual with the exception of several green links -- no more than five links to one page. When a user mouses over the green text, a box appears with a related text advertisement and an option to click for more information, usually to a splash page. On the other hand, editors and journalists cry that interspersing ads within editorial content is blasphemous -- tying paid ads to objective content could damage editorial integrity.

iMediaConnection spoke with Doug Stevenson, CEO of Vibrant Media, to discuss IntelliTXT’s potential -- and the controversy this product has raised.

iMediaConnection: Vibrant Media has been around since 2000. But how and when did you come up with the IntelliTXT concept?

Stevenson: We launched the business in July 2000 and we have been developing contextual keyword advertising since then. Our experience was working at AOL, and we could see that a much more effective way of advertising was to present it with relevant content. Essentially, we’ve been building a context engine over the last three and a half years, and we initially brought out IntelliTXT 12 months ago. Over the past 12 months, we’ve been testing and optimizing the product with publisher sites, and we now have 150 sites running the IntelliTXT product.

iMediaConnection: Who were some of the participants during the testing phase?

Stevenson: We’re working with sites like Hearst, IDG, IGN, and a whole range of technology, entertainment and game publisher sites. We have access to 250 real blue-chip advertisers like Microsoft, Hewlett-Packard and Intel, and we also have access to 100,000 advertisers through our relationship with Yahoo! Overture Services division.

iMediaConnection: What is the key benefit of IntelliTXT? In other words, what need does it meet that other online advertising doesn’t already cover?

Stevenson: I think the heart of advertising is relevancy. The more relevant the advertising, the more powerful and effective it is for the user and the advertiser. This is effectively user-activated advertising. The advert is only activated when the user expresses interest in the link itself. So the benefit for users is they’re getting relevant information inside an article. In essence, it brings search into the article itself. Therefore the user won’t need to go off to a search engine to find more information on a particular subject. The advertiser is getting very relevant, targeted placement. I think advertisers very much like the idea their advertisement is not going to be a distraction or an annoyance, but it’s going to be very relevant. The advertiser therefore gets click-through rates of 24 times that of normal banners and skyscrapers, according to our research.

I think the key thing is that this is user-activated advertising, so it only appears if the user mouses over the link, thus showing their interest in the product. This advertising is different from other forms of advertising in that it will only appear at relevant and appropriate moments that the users choose.

IntelliTXT contextual ad (Source: Vibrant Media)

iMediaConnection: Some have criticized the IntelliTXT model for violating editorial integrity. When you started developing IntelliTXT, how did you deal with the issue of overstepping editorial boundaries?

Stevenson: What we always wanted to do is to make publishers and editors feel very comfortable with this product. So over the last year, we’ve always worked closely with them to ensure that happens. Editors [of our client sites] have put up community areas that explain what IntelliTXT is. Motley Fool UK put up areas that explain what the green links are on the site and how the product works. So for editors and writers, I think if they can see that the click-through rates are there, and the relevancy is there, then they get a lot more comfortable with the product. Our job now is to educate publishers and users alike.

Stevenson: I think publishers recognize there are better areas on their sites to put this product than other areas. It works really great in review areas and feature-based areas. So, for instance, if a user is reading about an MP3 player, he or she can then click through on a link within the article to iPod or Rio or whichever MP3 manufacturer is covered. It’s bringing search to within the article itself, and giving users more convenience so they don’t have to go into another browser and do a search.

iMediaConnection: So it sounds like it’s just a matter of getting used to the idea of the two converging.

Stevenson: I think so. If you look back at all the different forms of online advertising and their evolution, whether it was the first banner ad or paid search or CNET’s Leaderboard ads, it just takes time for people to get used to a new form of advertising. What we’ve done over the last 12 months is made sure the whole experience has been good for users and publishers. Essentially, there are three things we’ve done over the last 12 months: one was really making sure the relevancy is there with our relevancy algorithm; second was making sure the placements were correct, which are the feature and review areas; and third was making the technology scalable going forward.

iMediaConnection: Based on your testing, how have users responded to IntelliTXT?

Stevenson: Generally, users find this a less intrusive form of advertising. We get feedback saying, “I understand publishers need to monetize their Web sites, and this seems to be a smart way of monetizing their content.” What users are saying is that they don’t like take-overs, pop-ups and pop-unders. Those are the kind of distracting, diverting forms of advertising they don’t like. The feedback we’re getting from users is that this is a smart form of advertising that’s ultimately useful for them.

iMediaConnection: Besides this new product, what other forms of advertising do you personally like?

Stevenson: We really love the work that Overture and Google have done over the last three years. I think they brought a lot of small- and medium-sized advertisers online through a very straightforward way; i.e., a cost-per-click model, in which advertisers can see results and measure the effectiveness of their advertising. I like all advertising that’s measurable and accountable. It’s a bit like the saying that “50 percent of my advertising is being wasted; I just don’t know which 50 percent.” So it comes down to effective advertising.

iMediaConnection: What do you think about the future of online advertising?

Stevenson: I think the promise of advertising has always been one-on-one marketing. The Web and Internet allow advertising to be so much more sophisticated. The ultimate holy grail for advertisers is relevant, targeted advertising.

I think online advertising in general is only going to get stronger and stronger, and what’s going to get phased out are other forms of media. There’s a lot of TV advertising that’s getting zapped by products like TiVo and Replay, so I think advertising dollars are going to shift from mainstream media to online. Remember, users are spending an average of 15 percent of their time online now, but the Internet only accounts for 2 to 3 percent of the overall advertising budget. That disconnect between the advertising spent and the time spent online will start matching, so you will see online advertising accounting for up to 10 or 15 percent of the overall advertising budget in the United States.