Behavioral Targeting Firm NebuAd Shutters Operations

UPDATED: Behavioral targeting outfit NebuAd, which caused controversy with its ISP-level targeting technology, is ceasing its operations.

According to court documents, filed in relation to a lawsuit brought against the firm in November, “NebuAd has been winding down its affairs since late summer 2008,” and “will cease to exist as an ongoing concern” following payment to its existing creditors.

This morning, the firm’s Web site displayed only its logo, and phone numbers for senior staff have been disconnected. “NebuAd now operates with a skeleton staff, and shortly, that too will disappear,” stated the letter, which was sent to U.S. District Court Judge, Edward Chen, by both NebuAd and the prosecuting attorney, Alan Himmelfarb. Mediapost first reported the news.

Tony Evans, an ex-commercial director for the firm’s London operation, left the organization in September. Speaking with ClickZ today, he said the remaining staff “plugged away [at alternative revenue possibilities] for a bit,” but that the number of staff has now been cut from 60 to just two. The London offices are now vacant. The company’s U.K. Managing director, Paul Goad, said he was currently in Latvia and was unable to discuss the matter.

NebuAd was forced to reconsider its business model last year after pressure from Congress regarding the legality of its tracking technology and the subsequent loss of its ISP partners. At the time, it said it would pursue more “conventional” ad targeting methods, such as those employed by the likes of Tacoda and Revenue Science, but CEO, Bob Dykes, tendered his resignation.

To make matters worse for the firm, a class-action lawsuit was brought against it and its ISP partners, which included CenturyTel, WOW, CableOne, Embarq, Knology, and Bresnan Communications, in November of last year. The suit argued the defendants violated two federal laws (the Electronic Communications Privacy Act and the Computer Fraud and Abuse Act) as well as two California laws (the California Invasion of Privacy Act and the Computer Crime Law) when it trialed the technology with consumers.

Meanwhile in the U.K., fierce debate continues to surround ISP targeting rival, Phorm. Despite the fact U.K. regulators appear to be satisfied the technology can be implemented legally, privacy advocates continue to object on both legal and moral grounds. In addition, the EU has now launched legal proceedings against the U.K. government in reference to trials of Phorm’s technology carried out by BT in 2007, without consent from its customers.

Phorm CEO, Kent Ertugrul, maintains that the U.S. market is of great interest to his company, and that Phorm can learn from the issues raised by NebuAd’s activities there.