By ANICK JESDANUN, AP Internet Writer
A pioneer of software that tailors pop-up ads to Internet users'
browsing habits is beginning to shun a practice that has invited much
derision and plenty of lawsuits. A new service Claria Corp. is
launching this month will still deliver advertising to the computer
desktops of Web surfers. Only this time, they won't be annoying
pop-ups.
So-called personalization -- targeting surfers with ads based on their
online outings and errands -- was always Claria's goal, says its
co-founder and chief executive, Jeff McFadden.
Pop-ups delivered via adware, which is often criticized as sneaky in
its installation, were merely a stepping stone as Claria waited for
the technology to improve and the behavioral-targeting market to
ripen, he said.
"It was never a destination," McFadden told The Associated
Press. "There's a lot of people who aren't fans of the pop-up model."
Some might consider that an understatement from the head of a company
whose name has become synonymous with adware, which many consider a
cyberparasite or worse.
Although Scott Eagle, Claria's director of marketing, said market
forces ultimately drove the decision, he acknowledged the new strategy
could help improve the image of a company that has bothered more than
consumers.
The New York Times Co. and L.L. Bean Inc. are among businesses that
have sued Claria for delivering pop-up ads that they said subverted
paid advertising or lured visitors to rivals. Claria even changed its
name in 2003 from Gator Corp., though the company insists it wasn't a
response to mounting criticism.
"It is a little naive of them to believe they can introduce a product
and have the sins of the past forgotten completely," said Jeff
Lanctot, vice president of media at Avenue A/Razorfish, an
ad-placement agency whose sister company makes behavioral-targeting
technology that could compete with Claria's.
"They have to be completely aboveboard and take extra steps other
companies don't have to do to gain trust back," said Ari Schwartz,
associate director with the Center for Democracy and Technology.
Many of Claria's critics remain skeptical.
Claria's new services will still require a software download "just
like the old Claria software," said Ben Edelman, a Harvard University
student who specializes in spyware research. "The question is how
sneaky they are going to be about it."
Claria's software typically comes bundled with free products such as
its own eWallet password-storage program and file-sharing software
like Kazaa. Though licensing agreements disclose the ad components,
many computer users don't bother reading them. And that prompts
complaints that Claria isn't doing enough to obtain consent.
In the new model, Claria will work with developers of toolbars and
instant-messaging programs as well as reputable Web sites - and
largely have them bear responsibility for branding and getting
consumer consent.
The Interactive Advertising Bureau says pop-ups peaked at 6 percent of
all online advertising two years ago and have been declining
since. America Online Inc. stopped selling pop-up ads in 2002, and
most Web browsers now block them.
Even so, Claria claims it commanded 20 percent of the adware market
with $100 million in revenues last year, mostly from pop-ups delivered
through software on some 40 million computer desktops.
The 7-year-old company, which has 235-odd employees at its Redwood
City, Calif., headquarters and other locations, began a pilot in May
of a new ad network called BehaviorLink that serves banner ads
targeted to a user's interests.
With software for it installed, someone reading online news articles
on maternity might get pitches for baby products.
And while Claria's pop-up ads sometimes covered up someone else's Web
site, BehaviorLink ads come with the site's permission. In some cases,
Claria buys ad space and resells it at a premium; in others, Claria
works out a revenue-sharing arrangement.
Companies like Revenue Science Inc. and Tacoda Systems Inc. also offer
behavioral-targeting services but they use browser "cookies" instead
of software downloads, meaning they could potentially reach more users
overall but won't have Claria's across-the-Web targeting capabilities.
The product Claria is launching this month, in a test version, is
called PersonalWeb.
It generates "personalized Web portals" on the fly so that a user who
just checked baseball scores and movie show times might get a page
pulling top items from ESPN and Moviefone.
The page will also display targeted ads from BehaviorLink.
An existing portal can also buy Claria's technology to incorporate
personalization. Though Yahoo Inc. and others now have customization
features, they rely on users to set preferences and are not automatic.
BehaviorLink and PersonalWeb combined, Eagle said, will mean more time
spent on each site and more value for each ad.
Traditional advertising has up to 30 times the potential of adware
pop-ups, he said, making Claria a possible target for acquisition. He
insisted, though, that Claria was happy to remain independent, and he
refused to comment on reports that Microsoft Corp. has been in talks
to buy Claria.
Claria still must navigate some challenging terrain on privacy and
consent, and many key decisions still need to be worked out.
For example, although Claria said it would obtain permission before
activating PersonalWeb, it is negotiating on a site-by-site basis
whether that permission would be limited to a specific site that runs
PersonalWeb or cover the entire network.
Claria says its data on browsing habits are all anonymous, but it is
open to letting partners link such information with personally
identifiable information.
Whatever happens, users will be fully informed before they accept,
said Reed Freeman, Claria's chief privacy officer. Benefits to the
consumer, he said, will be easier to explain than the previous
trade-off between free software and more pop-ups.
Larry Ponemon, one of three outside privacy consultants hired by
Claria, said complaints about privacy stem more from annoyance with
pop-ups rather than any data collected. Non-adware companies might
capture more data but get fewer complaints, he said.
Claria still must win over the Web sites that once sued it. Eagle said
most have been willing to listen, even if they have yet to sign deals.
Advertisers that have shunned pop-ups, meanwhile, have been more
willing to run traditional ads through Claria, Eagle said, though he
declined to name any of the 250 advertisers participating in
BehaviorLink's pilot.
Elias Plishner, head of the interactive group at Universal McCann ad
agency, said many companies that previously weren't willing to "dip
their toes into behavior marketing" might now be willing to give
Claria a chance.
Copyright 2005 The Associated Press.
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Anick Jesdanun (ap@telecom-digest.org)