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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