Spyware Goes Legit?

Several high-profile businesses got some free advertising on the Los Angeles Times Web site today, but it's not the kind of exposure they're looking for. Times writer Joseph Menn reported that Mercedes-Benz USA and Yahoo, which build the kinds of engines we like in our garages and for our computers, have relied on spyware to get their brands in front of Internet users. And they're not the only ones.

Spyware is a catchall term for programs that display advertising on your computer monitor. People usually download them as stowaways on other programs they find online, such as file-sharing software, instant messaging buddy icons and screensavers. Many programs do little more than lurk in a computer's innards, disgorging ads here and there. Other kinds are part of the online thief's toolkit, stealing private data from the computer -- passwords, PINs and the like. Several other companies, including Travelocity, also have ads that pop up as spyware.

If none of this rings a bell, just think about those times when you're in front of your computer and, out of nowhere, one of those annoying ads appears, its borders flashing as if it had just knocked back a handful of amphetamines. Then six others follow, more quickly than you can turn them off. At this point you wonder what ad department genius greenlighted such a miserable way to get people's attention. Menn explains the process:

"Instead of buying ad space directly, companies usually dole out money to... outside buyers specializing in Internet marketing. ... In each of those cases, the Internet ad buyers can turn to advertising networks using thousands or even tens of thousands of so-called affiliates. The networks take a percentage of the spending and give another cut to the affiliates, which range from one-person Web retailers to major companies that distribute free, ad-supported software."

Not bad, eh? Certainly not for the companies up and down this chain. As Menn reported, some security experts say that spyware can bring in as much as $2 billion a year for these guys.

In many cases, the companies don't know that this is the way their Internet ad strategy is being executed, the L.A. Times reported: "'We're funding the business models because we don't know any better,' said Clinton Schmidt, the director of online marketing at 1-800 Contacts Inc., a publicly traded Sandy, Utah-based company that bills itself as the world's largest contact-lens store. Mercedes-Benz USA and Travelocity said their pitches were placed in violation of company policies. 'We would not authorize anything installed in such a manner,' said Mercedes Internet marketing manager Lisa Cooper. She said the company had been testing a new ad network and hoped that the spyware appearance wouldn't be repeated. Travelocity spokesman Joel Frey said his company didn't know about the incident until contacted by newspaper. 'We can assure you that it is against our policies for ads to appear in unwanted software,' Frey said. 'We're working fast and hard to get to the root cause.'"

As Menn also explained, the infinite nature of the Internet prevents such easy cleanup: "The problem is that the networks and the affiliates -- and the countless 'sub-affiliates' working for the affiliates -- have an incentive to generate the most viewers, clicks and buyers they can. That leads some of them to trick people into installing spyware that produces a never-ending stream of come-ons. If an affiliate slips a deceptive piece of software into someone's personal computer and persuades the owner to buy something, the transaction could be passed through three or four businesses -- each taking a cut -- before the affiliate network hands off the customer to the merchant."

I don't know a single person who responds to or likes spyware. That's why Yahoo does business with a company that prefers to traffic in what it calls "adware." Call it what you will -- as Menn noted, the major "adware" providers have garnered plenty of scorn from state and federal officials, not to mention privacy advocates and the public, for doing the same thing that spyware does: "vague and insufficient disclosures to consumers and... making their programs difficult to remove from computers."

Yahoo's ad division, the L.A. Times reported, has a relationship with Claria Corp., which changed its old name from Gator Corp. in an attempt to shake off the bad reputation it was getting for knocking up people's computers with its software. This continues, however, and the financial results are looking good for both companies. The newspaper reported that they split the take, which Claria said accounted for 31 percent of its $90 million that it made in 2003.

This is a creepy development if there ever were one, mainly because most of the experts say that companies like Claria, WhenU.com and others aren't going away. Even as more companies say they'll quit signing on ad firms that rely on spyware, new arrangements are popping up, if you will. As a result, look for more intrusions by J.P. Morgan Chase, Disney, Citibank, Home Depot, Dell, British Airways and The Gap, the L.A. Times article said.

It doesn't take an Internet visionary to tell you that there are better ways to entice customers, but this is what passes for effective here in cyberspace. It may not send us straight to Walt Disney World or the mall, at least not right away. But it gets brands in front of our eyeballs and everyone in the food chain gets fed. Is it any wonder that Congress's attempts to ban spyware haven't wended their way down to the White House?

* And here's a small footnote: WFMY News 2, the CBS affiliate news program in Greensboro, N.C., ran an MSNBC report on this topic that spells everything out in very simple terms. It also notes last week's news that New York Attorney General Eliot Spitzer (D) sued company Intermix Media Inc., accusing the company of deliberately targeting children by offering free games and screen-savers with spyware programs riding shotgun.