A former manager at AEA Investors, Naider helped launch WhenU in 2000 as one of the pioneering adware companies. After enticing PC users to download their software from the Internet, adware providers like WhenU and Claria Corp. watch where people go on the Web and serve relevant ads - often in pop-up windows. It's big business. Privately held WhenU says it's profitable and sales will reach $50 million this year.
Adware is also a practice steeped in controversy. Proponents say such eavesdropping software actually benefits customers by sending them ads of interest, rather than more scattershot marketing. But critics accuse adware makers of aggressively pushing their software onto confused users, who don't know what's getting installed on their computers. BusinessWeek Silicon Valley Correspondent Ben Elgin recently caught up with Naider. Here are edited excerpts from their conversation:
Q: Why do you think adware critics are wrong?
A: We're firm believers that software-based advertising is going to be a big piece of the Internet's future. It works well for advertisers and consumers. It's not random advertisements, but rather ads based on the consumer's unique interests.
Advertising software has a fundamental advantage over Web sites in that it can understand if a consumer is exhibiting commercial interest in, say, mortgages. This is one of these things that we'll look back on in 5 or 10 years and say, "This was so obvious."
Q: Over 100 million people have downloaded WhenU's software, yet only 25 million are active customers. Isn't this high level of attrition a sign that customers don't want this stuff?
A: No. We're affected by the negative experiences consumers have with some of these illegitimate programs that hijack your homepage or open porn on your computer. It's natural to have a backlash against all sorts of applications.
But our technology is different. For instance, if you go to Staples' Web site, you may get a coupon for $30 off supplies. That's a lot of money.
Q: Critics say many users unwittingly download adware, including WhenU's.
A: No matter how strongly you communicate to users during the initial installation, there are going to be consumers that don't pay attention. The difference between the legitimate players in this space and the illegitimate ones is that the legitimate ones clearly brand and source all of the ads that they show. This is critical because it allows consumers to decide every time they see a coupon or ad whether they want to keep the software. We're based on the ideas of notice, control, and consent.
Q: How is adware different from spyware?
A: It's a legitimate question. For us, no data is kept or tracked at the individual-user level, whether anonymous or not. No profiles of users, anonymous or not. No user databases. The only thing we track is the efficacy of our advertising in the aggregate.
We're a big proponent of anti-spyware legislation at the federal level. The bad behavior of some imperils the legitimate business of others. It's a question of: Are you giving very, very clear information to consumers about where the software comes from? Do you identify yourself in a way that gives consumers choice?
Q: Where do you think adware will be in two years?
A: We want to eliminate the misperception that software-based ads can only take the form of pop-ups. Software-based advertising can be in the form of a toolbar that gives you five other selections when you're shopping for a digital camera or in a text link or button within your browser. As the technology evolves and improves, we will become a more and more natural part of the Internet experience.