Debra Goldman’s Consumer Republic

These days the Internet is no place for the fainthearted, but the 4-year-old software com pany Gator seems to have the requisite chutzpah.

It’s not just that Gator is a leading purveyor of the scourge of the Web surfer, the pop-up ad. It also cheerfully serves its clients’ ads smack-dab over their competitors’ sites—sometimes at the very moment a visitor is making a purchase. Gator even had the nerve to paste ads of matching dimensions right over Web-site banners, masking them from view. And then it sued the Interactive Advertising Bureau after the IAB bad-mouthed the company to the press. (The suit was dropped when Gator abandoned the practice.)

Yet Gator may have stepped over the edge last spring when, in its sales materials, it bragged to prospective clients that it could deliver eyeballs on big-name sites such as The New York Times. That was too much for the Times (even though it once used Gator to advertise on, and Dow Jones, the Washington Post, Gannett and others had seen enough, too. They sued the software maker for parasitically profiting from their investment in content. On July 12, a federal judge agreed with the plaintiffs and ordered Gator to temporarily stop delivering ads to their sites.

Gator vows to fight on. It says it is championing the right of computer users to fill their screens as they see fit against grasping content pro viders that limit consumer choice to protect their property rights. Users download the adware along with free software, both from Gator and other companies. Thus, Gator argues, consumers have chosen to receive their pop-ups and USA Today should have no more to say about it than it does about an AOL ICQ window.

Anecdotal evidence suggests, however, that there are perhaps millions of Gator customers who have no idea how its adware got on their hard drives. Best bet: They didn’t read a free download’s “terms of use” statement but agreed to it by checking a box. (And who hasn’t done that?) If Gator and its fellow adware purveyors stand for a consumer right, it’s the right to be lazy and careless.

But never mind. The legal bottom line is that Gator has permission to track as many as 23 million computers. The temporary injunction only affects the parties to the suit, so Gator can still flash Joe Surfer a Toyota ad when he visits Ford’s Web site and vice versa. The company says it has more than 300 clients, including blue-chip advertisers in the automotive, travel and retail categories. By targeting pop-up ads to consumers based on stated preferences or surfing habits, Gator executives have claimed click-through rates ranging from an impressive 6 percent to an eye-popping 26 percent. Compare that with the 0.2 percent response rates that site-specific pop-ups garner or the infinitesimal 0.01 percent results of banner ads.

Such figures, although unverified, do make one wonder: Has the judge in the Gator suit put a temporary kibosh on an unscrupulous pirate, or is he stymieing the most successful advertising gambit the sad-sack Internet has yet seen? Are the efforts to stop Gator—L.L. Bean and Weight Watchers have also sued to block its pop-ups—protecting the property rights of content providers at the expense of the promise of targeted, data-driven advertising?

The fate of Gator has ramifications that go far beyond the advertising backwater that is the Internet. If the antics of a third-party advertising agent can drive The New York Times nuts, imagine what they’ll do to Jamie Kellner. The CEO of Turner Broadcasting has already gone on record to express his displeasure with personal video recorders that he says enable viewers to steal programming. But Kellner and his fellow content providers have yet to confront the PVR’s abil ity to collect mounds of data on viewers. The Gator dilemma gives a foretaste of what TV programmers may soon be dealing with.

For a decade the advertising world has been predicting a glorious future of data-driven targeted marketing. No more would advertisers waste money buying programs that delivered eyeballs they didn’t want. Armed with data from individual households, diaper makers could target expectant mothers, cereal ads could reach kids in their bedrooms, and luxury goods could find the media rooms of McMansions. In such a world, it’s the guy who owns the data, not the content, who has something of value to sell to advertisers.

Everyone in the media world has long understood this, but only now, with Gator, do we begin to see how it could play out. With the stakes so high, one suspects that Gator will be spending a lot of time in courtrooms in the coming months.