By Robert MacMillan
washingtonpost.com Staff Writer
Monday, May 9, 2005 9:51 AM

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.

Internet security company VeriSign Inc. wanted the answer to a pressing question: Would people give up their computer passwords for a cup of coffee? Do we even have to tell you the answer?

The San Jose Mercury News reported on the company's marketing stunt: "VeriSign on Thursday offered passersby in downtown San Francisco $3 coffee coupons if they would reveal their passwords to survey-takers. Two-thirds of the 272 respondents turned over their passwords without flinching. The rain and then a BART bomb scare seemed more problematic. A few who said they simply would give a made-up password were dropped from the results, though they did get free coffee. And with a little coaxing, 70 percent of those who said 'no way' gave up significant hints, like wife's name, anniversary date and the ever popular pet's name." I drink enough coffee that even William S. Burroughs would try to stage an intervention were he still alive, so I guess I'd have to carry around a fake password for just such an occasion.

It seems, however, that San Franciscans didn't think twice about giving up the real goods, the Merc reported. "You would think people in the Bay Area might show more tech sophistication, said VeriSign executive Mark Griffiths. 'People are in denial,' he said. To wit: One executive, too busy to stop, sent his secretary back with his password so he could get the free coffee. She gave up hers, too."

There has been a lot of news lately about Geek Squad and other computer service companies that make house calls to help frustrated PC users figure out why their machines aren't working. It's no secret that it's a booming business, but New Hampshire's Nashua Telegraph discerned an interesting trend. "How much room exists in this industry is a good question right now, following last month's arrival in Nashua of Geeks on Call, the national franchise of tech repair whose TV commercials have given a high profile to what has been generally been a home-brewed business. ... Charging people at least $50 an hour to bring computer repair and service to their houses, rather than charging less if they lug their beige box into your shop, is big business. But it's still tiny compared with on-site tech service and work within industry, where IT departments are the norm. As a result, the house-call tech industry remains fragmented, with one-man operations dominating."

The Telegraph said that some computer experts are signing on as franchisees, but several told the paper that they think this is one business that will always have room enough for big players and independents.

Don't look for it on any license plates, but it's true. The Charlotte Observer last week profiled AEBN, the nation's largest distributor of online porn movies. "AEBN doesn't produce porn. Instead the company sells movies made by others, such as Playboy and porn giant Vivid Entertainment, to view over the Web on streaming video. And now it will send clips to mobile phones. 'We're more of a technical company,' said AEBN President and founder Scott Coffman, who got into porn after failed bids to write cartoon books and create a cell phone directory." This is far from the Research Triangle technology hub that state officials probably were anticipating, but it could prove beneficial for the economy all the same. The Observer reported that online porn-video-on-demand sales could surpass DVD and videocassette sales within three years, according to adult industry statistics.

Sometimes protecting your image is a painful process. Boston Mayor Thomas Menino (D) is discovering this as he prepares to run for reelection in the heart of the Internet age. The Boston Globe reported that his reelection committee has registered a stack of Web addresses that opponents could use to make fun of his famous penchant for word-mangling in public.

"They're not nice names, even in the rough-and-tumble world of the Internet: meninomumbles.com, mumblesmenino.org, mumblesmeninoformayor.net," the Globe reported. "The mayor, who said he did not know anything about the purchases, has in recent years embraced the name that has dogged him for years." The Globe noted that the campaign's first choice -- formayormenino.com -- is a bit of a dog (to say the least). Other obvious choices went unclaimed, however: "Three addresses -- meninoformayor.com, menino2005.com, and reelectmenino.com -- were all bought by the oldies radio station AM 830 WCRN. The Frank Foley Show snapped up the addresses in January as a publicity stunt, saying they would give them up only if Menino paid a ransom of two dozen doughnuts." The campaign said it won't negotiate.

Send links and comments to robertDOTmacmillanATwashingtonpost.com.