Adware under the microscope
Published: 28 Jun 2002 16:08 BST
Toyota Motor executives are adamant about respecting their customers' privacy, and they say they won't alienate buyers with Web monitoring and other controversial online marketing tactics.
So they were understandably caught off guard when informed by a reporter that some visitors to Ford.com were greeted with a prominent pop-up ad offering to redirect them to Toyota.com, a practice that seemed clearly at odds with the company's stated opposition to aggressive online advertising.
Spokeswoman Jennifer Chung speculated that Toyota, which spent $1.27 billion on U.S. advertising in 2000, purchased the ad through an agency or some other partner that didn't share her company's views. But she repeated that such practices were not Toyota's "preferred form" of online marketing.
If the gap between Toyota's marketing philosophy and actual practices appears hypocritical, it certainly is not unique. Companies from General Motors to US retail giants J.C. Penney and Target are struggling with the concept of "adware"--programs bundled with other downloaded software that monitor consumers' Web browsing and serve them ads based on their online habits.
Only a handful of companies or their ad agencies have developed consistent marketing strategies incorporating adware, and still fewer have determined whether the newest online marketing trend even works. Cynics say they're confident that corporations will dismiss adware as little more than a niche strategy for a smattering of consumer-products industries catering to a limited number of people willing to give up personal data.
Even those companies that believe in adware are proceeding with well-founded caution. Privacy advocates strongly oppose the practice, fearing that corporations will embrace adware and soon be monitoring millions of potential consumers, gleaning sensitive password and financial information in the process.
"There's virtually no authoritative research to point (to in support) for or against adware, so companies are feeling as they go," said Deborah Moscardelli, assistant professor of marketing at Central Michigan University and one of the few academics to study the effectiveness of so-called interstitial ads such as pop-up and pop-under ads. "So far all we can say is that it may aid in brand awareness, but it also has an irritation factor because some consumers feel it's intrusive. You could say adware is a lot like TV advertising in that way."
Large corporations rarely authorize adware campaigns outright, instead farming out "new media" purchases through agencies specializing in Internet advertising. Through this indirect model, many large companies are investing in adware--especially industries whose customers use the Internet for research before making a purchase, such as the travel, financial services and automotive businesses.
Fearful of a backlash from privacy advocates, representatives at dozens of the nation's top advertisers refused to talk about adware or said they were unsure whether their companies used it. But consumers who have downloaded ad-supported software on the Internet will quickly notice pop-up ads from Travelocity, Priceline.com, Thrifty, United Airlines, American Express, Honda, DaimlerChrysler and Toyota. Retail companies such as Lancome and L'Oreal are experimenting with the trend, as are technology heavyweights like Microsoft, Oracle, Sprint and Verizon.
"I'd say almost without exception our clients view it as here to stay," said Jeff Lanctot, chief media strategist for Seattle-based interactive ad agency Avenue A, the third-largest buyer of online advertising. It has incorporated adware into the online campaigns of clients such as Best Buy, AT&T Wireless and Microsoft.
Lanctot said the "brilliance" of adware is that it touches consumers proactively whenever they're online, especially while they are at work--a period of time that traditionally has been off-limits to advertisers.
Unlike prime-time television slots or peak commute times, when many consumers are a captive audience for commercials, work hours were considered off-limits to advertising for years. That thinking changed quickly with the popularisation of the Web, but the initial rush to buy banner ads fizzled along with the dot-com bust as marketers recorded typical click-through rates of 0.01 percent or less.
Marketers are hopeful that adware will be a more effective way to capture consumers during work. "Imagine a third of the day where consumers were pretty much unreachable. And now it can be a vital part of any marketer's campaign," Lanctot said.
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