Behavioral marketing firm Claria is expected Tuesday to detail plans for its new ad network, BehaviorLink, in which its ads will appear on publishers’ sites, rather than in pop-up ads. The network is set to debut in the second quarter of 2005.
The new offering will operate like any other third party ad network, in many respects. Claria will buy run-of-site standard ad units from around 3,000 publishers, then serve relevant ads to Internet users who have installed its software, based on their recent behavior. It expects to spend more than $100 million annually on media, which it will then resell on a CPM, CPC or CPA basis.
Targeting ads via a network will provide the company formerly known as Gator with a revenue alternative to its infamous desktop pop-ups. That offering has been very lucrative for Claria and its advertisers over the last several years – the company says it brought in $90 million in revenues in 2003. It has also drawn the ire of marketers, publishers and privacy advocates, at least 10 of which have filed litigation against the company.
“Where we have insight into consumer behaviors, we will place a relevant ad,” said Scott Eagle, Claria’s chief marketing officer. “People don’t like pop-ups. There are publishers and others who object. We will not get all the industry support we need if they don’t share the benefits.”
BehaviorLink still uses intelligence gathered from observing user behaviors online. However, it eschews the pop-ups that have characterized its platform to date. The company also hopes its new ad model will help it court more well-established software publishers, which bundle Claria’s software with their own free offerings, and share in the revenue generated. The company has also assembled a group of privacy experts to boost its image with more prominent software publisher.
“We are talking with anyone who has a marquee software that’s sticky and may not be monetizing well for them right now,” said Eagle. “Those are the types of people who are potential integration partners.”
Claria has created a new division, Vista Marketing Services, to house the new offering. As part of the BehaviorLink rollout, Claria presented testimonials from several large advertisers and media buying agencies, including i-traffic, Performics and Carat Interactive.
“We’ve been taking it to agency and advertiser community, and the response is what you expect,” said Eagle. “Suddenly, for the first time, there’s no angst around this model.”
But some heavy-hitting media buyers are still wary of the company. One buyer for a large U.S.-based agency said Claria carries “a lot of baggage” from lawsuits and privacy concerns related to its practices, and he would hesitate to consider a future media buy with it. He asked not to be named.
Claria executives have discussed their plans to launch a publisher ad network since early last year, but until today had not put forth a launch date. Even now, with a Q2 launch confirmed, the company said it couldn’t identify any of the initial publishers in the BehaviorLink network. Eagle said this is because site owners are generally reluctant to publicize that their media can be bought through a network, for fear it will deter would-be advertisers from buying direct.
For Claria, BehaviorLink will initially mean more work for less pay-off. Under its existing model, an impression is served to the user’s desktop directly by GAIN, Claria’s installed adware product, sometimes at the moment he or she is considering an online purchase. In other words, the company creates its own inventory. The company’s margins for BehaviorLink sales will obviously be thinner than those for its GAIN-served ads, since it will have to actually pay for the media into which it serves ads. Additionally, the effectiveness of those impressions will presumably be less than for its GAIN-served units, since they’ll be served hours or days after the user action that triggers them.
But even hours or days later, the impressions are surprisingly powerful, at least according to Claria’s own research. For individuals who saw one of Claria’s ads within 14 days of the action that triggered it, the company found the click-through rate was between four and 30 times higher than that of an “untargeted” ad.
Also on the plus side for Claria: The company will be able to sell a much greater number of impressions per user than it could under GAIN, which is frequency capped in order not to over-impede a user’s online experience. For Claria’s Eagle, it’s all about grabbing a piece of the expanding in-page online ad market.
“We’re the largest player in a $400-$500 million pond; great,” said Eagle, who noted the market for online display advertising is estimated above $6 billion.
Claria has its tracking software installed on approximately 40 million active users’ desktops, but the overlap of that population with the initial BehaviorLink audience is only between seven and 15 percent. That makes the total reach of the BehaviorLink network about four million, plus or minus.
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