Old tricks for new e-conomy

It's not a good idea to pay people to shop, and it's easier on the eyes to flip through a catalogue made out of paper and ink than to view images on a PC screen. Seems simple, right? If only e-retailers would catch on.

One tactic that backfired is the pay-to-surf idea, which has come close to wiping out AllAdvantage.com.

The site pays members 53 cents an hour to surf the Web while ads are displayed on screen. The company planned to turn a profit, reports the San Francisco Chronicle, by collecting data on its 2.9 million active members and then selling highly targeted ads aligned with members' interests. "What looked groundbreaking then seems foolhardy now," says writer Carrie Kirby. AllAdvantage has taken in only $US14.4 million but paid out $US49.8 million, and it has lost $US102.7 million altogether.

Not surprisingly, it's withdrawn its IPO. It may be too late for the likes of AllAdvantage, but Business Week's Neuborne says other online businesses can wise up in time for the next holiday shopping season by focusing on service. Don't forget print catalogues, adds the New York Times' Bob Tedeschi: "a new item on the low-fat marketing menu".

* Peg Wallace writes for the The Industry Standard (US)

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