Softbank, AllAdvantage To Expand Services to Japan

Sponsored Web surfing company AllAdvantage and a subsidiary of one of its major shareholders, Softbank Corp., are developing a joint venture in Japan to further develop AllAdvantage’s presence there.

AllAdvantage either pays users or gives them entries into a monthly sweepstakes — users’ choice — in return for surfing using a floating Web bar, which displays banner ads targeted based on surfing habits.

AllAdvantage said it and Softbank Media & Marketing, which develops and invests in Internet marketing ventures in Japan, will also explore ways to extend its services to wireless devices and set-top boxes.

SMM’s parent company, Softbank Corp., is a major Internet investment player and controls a seat on AllAdvantage’s board. Early this year, Softbank made a $70 million investment in the company through a U.S. subsidiary.

In the face of increasing competition and hopes to capitalize on growing Internet use out of the U.S., American marketing companies have lately been partnering abroad. Japan itself hosts the world’s second largest Internet market of 18 million users.

Japan’s consumer Internet structure also differs fairly significantly from the U.S., with higher penetration of wireless Web devices and faster adoption rates.

“Japan is a highly sophisticated market which must be approached with the right partners and expertise,” said AllAdvantage.com CEO Jim Jorgensen. “This joint venture creates the right instrument for us to expand effectively and rapidly in Japan.”

The announcement also comes during a time when Internet marketing is taking a beating in the market.

The stock prices of ad networks like DoubleClick, 24/7 Mediaand CMGI‘s Engage are all about 70 to 90 percent off their 52-week highs.

It’s a similar story for several other high-profile firms, like i-shop Avenue A and marketer ValueClick which all recently announced lower-than-anticipated earnings thanks to the much-publicized slowdown in dot-com ad spending.

This suggests a particularly troubling state of affairs for a play like AllAdvantage, which is still experimenting with ways to make money and establish a path to profitability.

Recently the company reduced the monthly maximum users can earn and offered the sweepstakes as an alternative to cash payments. The company also filed for an IPO earlier this year, which it withdrew in June.

AllAdvantage spokesman Alex Gourevitch said the company earns money through ad sales on its floating bar and through products and services — which include a deal with outsourced techbology vendor MyCIO.com to distribute antivirus software to users in return for a slight fee.

The company also hopes turn technology licensing into a revenue stream — the first deal of which will be its agreement to license technology to the new joint venture with Softbank.