• by Wendy Davis  @wendyndavis, February 15, 2005

Making good on its statement filed last April with the Securities and Exchange Commission, Claria Corp. today will announce that it intends to start a behavioral targeting service.

With the new service, Claria, known as an adware provider, will send targeted ads to consumers based on their surfing activity. The service, called BehaviorLink, will build detailed--but anonymous--profiles about consumers by combining information from cookies that track behavior across a limited number of commercial Web sites with information about the surfing habits of 40 million existing subscribers gleaned from the company's ad-serving software.

Beginning in the second quarter, Claria will purchase ad inventory from portals and publishers, and then serve ads from marketers who have signed up for the service. Unlike Claria's adware business, the ads won't be pop-ups; rather, they'll appear as part of the publisher's Web site. Claria also intends to continue sending adware pop-ups to consumers who download the company's ad-serving software in exchange for free software like KaZaa, said Chief Marketing Officer Scott Eagle.

The theory behind the behavioral model is that visiting certain Web sites indicates an interest in purchasing certain types of products or services. For instance, Web users who go to car-related sites might be interested in buying an automobile.

Because Claria can use its adware software to create in-depth profiles of consumers, some say the company can present a powerful challenge to other networks that serve behaviorally targeted ads -- such as Avenue A/Razorfish's DRIVEpm and America Online's Advertising.com--that just rely on tracking cookies. Such cookies, in general, only record visits to certain specified Web sites, as opposed to the adware software, which tracks users through a much broader range of Internet destinations.

"It's a great way for them to leverage the systems they've got and the technology they've put together," said JupiterResearch analyst Gary Stein. He added that the deal also gives Claria the chance to "extend an olive branch to publishers they've had run-ins with." A number of publishers have criticized (and in some cases, sued) the company for sending pop-ups to consumers, on the theory that pop-ups distracted them from the publishers' ads.

So far, about 100 advertisers--including those who already use Claria for adware--are on board. Claria also has about 3,000 sites currently available; until now, the company has run ads promoting itself on those sites. Eagle said Claria intends to spend at least $100 million purchasing ad inventory this year, up from $25 million. To gear up for the launch, Claria hired 15 new employees in the fourth quarter, and intends to hire 25 others.

Claria's ambitions don't end with launching the network. The company also aims to persuade a publisher to add Claria to its toolbar, in hopes of growing its software-subscriber base to at least 100 million.

The company also intends to announce today that it has formed a privacy team in connection with the behavioral marketing service. Members include Richard Purcell, president of Corporate Privacy Group and former chief privacy officer of Microsoft; Larry Ponemon, chairman of the consultancy Ponemon Institute; and former Federal Trade Commission attorney Lewis Rose, now at the law firm Collier Shannon Scott.

Purcell said the company is "following accepted industry practices" in its new initiative--that is, Claria doesn't collect or store personally identifiable information about Web users.

Consumer watchdogs, including the Washington, D.C.-based Center for Democracy and Technology, have criticized Claria in the past for its adware. The group has claimed that users don't always understand that they'll be getting pop-up ads when they download programs such as KaZaa for free.

Ari Schwartz, associate director at the organization, said that transparency is still a concern, because it's not clear that consumers will know they're being served targeted behavior-based ads. But, he said, it appeared that Claria had "taken a lot of steps" to protect consumers' privacy. And, he added, BehaviorLink might be preferable to adware. "It's an improved model because it's less invasive," he said.