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Online Ad Pioneer Shuns Pop-ups

A pioneer of software that tailors pop-up ads based on internet users’ browsing habits is beginning to shun a practice that has invited much derision and plenty of lawsuits.
A new service which Claria Corporation is launching will still deliver advertising to the computer desktops of web surfers. Only this time, they won’t be annoying pop-ups. So-called personalisation - 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 criticised as sneaky in its installation, were merely a stepping stone as Claria waited for the technology to improve and the behavioural-targeting market to ripen, he said.

"It was never a destination," McFadden said. "There are 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 and L.L. Bean are among businesses which 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 Corporation, 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 behavioural-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 Centre for Democracy and Technology.

Many of Claria’s critics remain sceptical.

Claria’s new services would still require a software download "just like the old Claria software," said Ben Edelman, a Harvard University student who specialises 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 websites - and largely have them bear responsibility for branding and getting consumer consent.

The Interactive Advertising Bureau says pop-ups peaked at 6 per cent of all online advertising two years ago and have been declining since. America Online stopped selling pop-up ads in 2002, and most web browsers now block them.

Even so, Claria claims it commanded 20 per cent of the adware market with $US100 million ($A129 million) in revenues last year, mostly from pop-ups delivered through software on some 40 million computer desktops.

The seven-year-old company, which has 235-odd employees at its Redwood City, California, headquarters and other locations, began a pilot in May of a new ad network called BehaviourLink 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 website, BehaviourLink 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 and Tacoda Systems also offer behavioural-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 "personalised web portals" on the fly so that a user who just checked baseball scores and film show times might get a page pulling top items from ESPN and Moviefone.

The page will also display targeted ads from BehaviourLink.

An existing portal can also buy Claria’s technology to incorporate personalisation. Though Yahoo! and others now have customisation features, they rely on users to set preferences and are not automatic.

BehaviourLink and Personalweb combined, Eagle said, would mean more time spent on each site and more value for each ad.

Traditional advertising had 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 has been holding 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 would be fully informed before they accepted, 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 websites which once sued it. Eagle said most had been willing to listen, even if they have yet to sign deals.

Advertisers who have shunned pop-ups, meanwhile, had been more willing to run traditional ads through Claria, Eagle said, though he declined to name any of the 250 advertisers participating in BehaviourLink’s pilot.

Elias Plishner, head of the interactive group at Universal McCann ad agency, said many companies which previously weren’t willing to "dip their toes into behaviour marketing" might now be willing to give Claria a chance.

Some questions and answers about Claria’s new strategy:

Q: Are pop-up ads going away entirely?

A: No, but Claria says it is scaling back that business and might one day eliminate pop-ups entirely. Scott Eagle, Claria’s director of marketing, says the company has been winding down bundling deals with makers of free software. It recently terminated a deal with Sharman Networks, makers of the file-sharing software Kazaa. (Sharman officials, though, claim unrelated disputes were involved but refused to elaborate.)

Nonetheless, other distribution deals have yet to expire, and Claria still makes the pop-up-producing software available when downloading its eWallet password-management software.

Q: How will Claria software get distributed now?

A: Claria’s software is on some 40 million desktops, but keeping it there is a challenge given anti-spyware programs that identify such software as threats. Since the company’s founding in 1998, four times as many copies have been removed or rendered inactive as people get new computers.

To get on more desktops, Claria figures it needs to partner with developers of toolbars and instant-messaging programs as well as with reputable websites. But the company had encountered resistance because of the pop-ups, Eagle said.

Claria is thus developing separate software completely free of the pop-up functionality that will enable targeted ads based on users’ surfing habits. Claria has yet to finish writing that software, but once it does, it hopes to begin signing distribution deals. A test version is expected later this month.

Q: Are rival adware companies going to follow Claria in moving away from pop-ups?

A: Yes and no. One rival, WhenU.com, isn’t scaling back its pop-up ad business, and chief executive Bill Day believes pop-ups remain viable if done right. But Day acknowledged plans to expand into traditional ads in the next six months, also using behavioural-targeting technology. He would not provide details.

Q: What’s all this talk about Claria? I thought the company is Gator.

A: The company changed its name in 2003 as criticism of its practices mounted. The company claimed the name change was a response to it having significantly broadened its portfolio. The original product, eWallet, continues to bear the Gator name.

Sydney Morning Herald News Service

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