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Adware Maker Steps Away From Pop-Ups

Claria's new software is designed to put targeted ads on existing sites, not on unrequested pages.

August 01, 2005|From Associated Press

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.

Instead, the product called PersonalWeb generates "personalized Web portals" on the fly so that a user who just checked baseball scores and movie show times, for example, might get a page pulling top items from ESPN and Moviefone.

So-called personalization -- targeting surfers with ads based on their online outings and errands -- was always Claria's goal, said Jeff McFadden, co-founder and chief executive of the Redwood City, Calif., company. Pop-ups delivered via adware, which is often criticized as sneaky in its installation, were merely a steppingstone as Claria waited for the technology to improve and the behavioral-targeting market to ripen, he said.

"It was never a destination," McFadden said. "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 that the new strategy could help improve the image of a company that has bothered more than consumers.

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.

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 such as 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% 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 says it commanded 20% of the adware market with $100 million in revenue last year, mostly from pop-ups delivered via software on about 40 million computer desktops.

The 7-year-old company, which has about 235 employees, 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.

While Claria's pop-up ads sometimes covered up someone else's website, BehaviorLink ads come with the site's permission. In some cases, Claria buys ad space and resells it; in others, the company works out a revenue-sharing deal.

The product Claria is launching this month, PersonalWeb, 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.

Claria still must navigate challenging terrain on privacy and consent, and many key decisions 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.

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