• by Kate Kaye , April 26, 2004

Tacoda Systems hadn't intended to make an official announcement regarding its new behaviorally targeted ad network AudienceMatch just yet. But the news hit the virtual presses yesterday.

According to Tacoda CEO Dave Morgan, as more and more gossipmongers gathered at the Web ad industry well to whisper about the audience management firm's latest efforts, the company didn't have much choice but to bite the bullet and talk on the record. Knowing Morgan's history in the ad network space (he did, after all, start Real Media, which later became 24/7 Media), it's no wonder that word of another network led by Morgan piqued the interest of industry insiders, and quickly spread.

"We're still very much in the test phase," Morgan says, with regard to the AudienceMatch Network. Tacoda currently partners with 18 media companies that run over 500 sites; they use Tacoda's Audience Management System to segment and refine ad targeting based on consumer interactions. No partners have officially been named as clients of the new offering, but four have signed on, according to Morgan, who adds: "It's natural to build what is essentially an advertising front-end on to our product offering, so we could network together our partners."

In order to target cost-per-click text ads throughout the new network of publisher sites, Tacoda is leveraging data it has already collected on consumers who visit sites using its Audience Management System. The text ads will appear outside of content much like Google's contextually driven AdSense text ads. Morgan believes that text ads are the least likely ad format to conflict with the goals of its publisher clients that use Tacoda's primary software offering to help sell ad space to brand advertisers.

The AudienceMatch technology can be applied to any type of ad format. The network was developed to accommodate scalable media buys for campaigns targeting millions or tens of millions of users across multiple sites, as well as to enable publishers to add value to deep sections of their sites that are often difficult to extract profit from. Tacoda and partner sales forces will sell AudienceMatch ads.

"It's all bullish," declares Jarvis Coffin, president and CEO of specialty content ad network BURST! Media. "Advertisers are throwing their arms around ever increasing amounts of the Internet." BURST! currently does not partner with Tacoda Systems, but has been in discussions with the company.

Although AudienceMatch has been compared to Google's and Overture's contextually driven cost-per-click offerings, the new network also may rival networks that target ads based on user behavior such as those served by Claria Corp. Once known as Gator, Claria, serves ads like pop-ups and pop-unders to users who register to download its free software in exchange for allowing the company to track their Web behavior. Thus, Claria ads are served to network users visiting any Web site rather than only those visiting a site within a particular publisher network, as is the case with AudienceMatch. According to official Claria literature, the firm is developing a service called BehaviorLink, which will display behaviorally targeted banner and other display ads to its network users through existing ad placements on pages of partner sites. Claria refused to speak on the record for this story.

Morgan agrees that the way Tacoda's network targets ads is similar to that of Claria's ad network. As far as pop-up-style ads served by companies like Claria are concerned, he stresses: "If we're going to grow as an industry ...we have to be respectful of the interests of the 99.8 percent of people who don't respond well to those ads, rather than the few that do."

Claria has been the target of legal action by publishers that believe the company is infringing on their territory and competing directly with their advertiser clients while users visit their sites.

Tacoda acts as a data middleman, and all information it uses to target ads is owned and stored by its publisher partners. Still, there are echoes of DoubleClick's data debacle.

In 2000, DoubleClick got into legal hot water after announcing plans to attach personally identifiable offline information from Abacus Direct (a firm it had acquired), to otherwise anonymous information it collected by tracking Web user click-streams via cookies. At the time, DoubleClick faced at least four lawsuits alleging privacy violations, according to Securities and Exchange Commission documents.

Questions that arose at that time suggest themselves today: If users are not made aware that their interaction with Web sites and ads are tracked, is it fair for that information to be stored and employed to target ads to those users?