• by Steve Smith , Staff Writer @popeyesm, April 20, 2007

As adware firms discovered long ago, getting client software on targets' computers may be the best way to track their behavior and deliver ads that are most relevant to the ways they actually work online and offline. But as consumers themselves also made clear long ago, the terms of the adware deal pretty much suck for them. They get kludgy software on their system (often installed surreptitiously or deceptively), and the real "value add" is random pop-up ads?

As we chronicled here weeks ago, former adware provider Claria is redirecting its adware engine toward personalized portals. Others, like Zango, are still installing client-side ad-serving software and toolbars on PCs -- but Zango CEO Keith Smith explains how all parts of the process have to be fully visible and the exchange of value substantial. Zango gives users free access to 100,000 pieces of content (games, applications, videos, etc.) and serves contextual toolbar ads and text links. It even opens a new browser window that lands a user directly on a sponsor's page. But this isn't your father's (or older brother's) "adware," Smith argues. These are ad-supported desktop applications where the ads are finely tuned to current behavior and the content is compelling.

Behavioral Insider: How has your technology evolved after the backlash against adware?

Kevin Smith: We thought from the beginning that we wanted to be able to entice the user in some form or fashion, to give them something of value to opt into -- and to install our software on their computer so we could deliver that right ad at the right time. We evolved into what we call a desktop advertising company [with] not much resemblance to what most people would consider an adware company.

The big advancement we have made is to secure our network so we can work with publishers, content providers and advertisers, and do it all in a very safe environment where we have complete control over the opt-in experience for the consumer.

When we first began working with third-party publishers, we paid a bounty to get a user to install our software, and the publisher had to sign up to our code of conduct and abide by our rules. But we really left it up to the publisher to make sure that the opt-in happened -- and frankly, that was a big mistake on our part. There were publishers who took advantage of that situation and defrauded us of significant amounts of money, and also harmed some consumers by installing the software on their computers without the proper notice. So we made a policy shift to no longer work with third-party distributors. We have to have a direct relationship with everyone who distributes our software.

And the second piece was to change the technology to ensure that we were completely in control of the opt-in process. We could guarantee that when a consumer gets our software they get it with the proper notice and consent.

Behavioral Insider: In your case you are not doing pop-ups, but actually opening up new window.

Smith: We have multiple ad formats. We have a toolbar that is contextually relevant. Based on which site you go to, the buttons and the banners in the toolbar change dynamically. Go to a mortgage Web site, you get links on that toolbar that are mortgage-related. You can also go to the search box like any other toolbar and search there, and of course we have CPC ad formats there. We have 'targeted visitor ad formats,' which is a new browse window. This is actually a fully qualified URL and a separate browser window and the actual landing page. If you are a travel advertiser and someone types 'travel' you may want to land them on your home page, but if they type in 'Bahamas cruise' you may want to land them on the Bahamas cruise page. It gives that advertiser a deep linking capability to get [users] quicker to a transaction.

Behavioral Insider: Do you track behavior over time, or respond to immediate browser behaviors?

Smith: We respond to immediate browser behavior. A lot of it comes back to a relevancy factor. If we are going to have low frequency, we should show ads when a consumer is actually interested in something that is commercially relevant -- and show them the ad at that point. As a result, we don't track behavioral data, and we don't log any personally identifiable information at all.

Behavioral Insider: How do you manage browser window ads so they don't feel like pop-ups?

Smith: When it comes to that format we recognize that less is more. We do not want to, nor can we, barrage the user with ads. You have to be highly relevant if you are going to show that ad format. And you have to make sure you show it very infrequently. On average, on our entire network we show just over one ad per user per day. So the frequency is very low to make sure the annoyance is low. And we constantly put the exit ramp in front of consumers so they can get off this train if they want to.

Behavioral Insider: You use a unique metric of cost per visitor for those ad units? What are the costs?

Smith: Depending on the category. The minimum is 1.5 cents per visitor and average across is in the 2.5 cents range. The highly sought after categories can be 10 cents to 15 cents per keyword.

Behavioral Insider: But doesn't a more visible system also invite high customer turnover? You have 20 million using, it but for how long?

Smith: Typically, there is a trial period of about three days, and that's when you find if the consumer is going to stick around and like the value proposition. [Some will] access [their] video and play [their] game, and now [they] will uninstall it. Once they get past that period of time the retention is extremely high, and we tend to keep users. And we find that if a consumer interacts with more pieces of our content -- comes back daily to play Sudoku or has a screensaver of ours or uses our messenger programs -- then that consumer is going to stick around for a very long time. So, our ongoing goal is to give more and more high-quality content to the consumer, not only to increase the longevity of the consumer but because of the direct reflection of how happy the consumer is with the trade-off.