September 21, 2011 / 9:34 AM / 6 years ago

Finnish startup aims to change Web advertising

HELSINKI (Reuters) - Finnish technology startup Kiosked aims to change the way money moves on the Internet, adding links to advertisements to web content like pictures and replacing advertising banners.

The company on Wednesday opened its growing archive of some 5 million photos, which can be used on the Internet by anyone. Pictures are tagged with related advertisements, which can be clicked, and when these lead to sales, the copyright owner, content provider and Kiosked get a small cut.

A picture of a Ferrari car for instance in a blog about a trip to the company’s hometown Maranello could include ads offering a flight there, renting a hotel or a car.

“We will turn the Web upside down,” co-founder Micke Paqvalen told Reuters in an interview. “We will turn the Internet into what it was originally intended to be -- the world’s largest marketplace, without annoying banners.”

Analysts said it will take time before Kiosked could gain wide adoption, and they see some risks in linking editorial content and advertisement so closely.

“I‘m sure that publishers and advertisers will experiment with it, but it won’t kill off banner advertising any time soon,” said analyst Nitesh Patel from Strategy Analytics.

“Publishers will need to evaluate in order to be sure to make more money through this model versus banner adverts, and this will take time,” Patel said.

Globally, online advertising is expected to overtake newspapers as the second-largest advertising medium by next year, and is forecast to reach $129 billion in 2016, according to advertising group Magna.

Kiosked has trailed the technology in Finland with media groups including publishing company Sanoma. Paqvalen said the trials had shown that by making pictures in a photo archive available for free online use boosts revenue per picture by 20 to 50 times.

Kiosked has so far been funded by founders Paqvalen and Antti Pasila, but it will seek outside capital as it expands beyond Finland.

Reporting by Tarmo Virki; Editing by David Holmes and Hans-Juergen Peters

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