October 14, 2004 10:00 AM PDT
Revenge of the pop-ups
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Service Pack 2 (SP2), Microsoft's security update to Windows and Internet Explorer, recently armed 40 million people with tools to automatically suppress advertising windows that spring up, over or behind requested Web pages. Couple that with the millions who have downloaded free pop-up-blocking toolbars from Google, Yahoo, MSN and others, and nearly half the Web audience in the United States has voted against pop-up ads, according to several estimates from ad-serving companies.
Web advertisers are already turning the tables on tools that aim to block out their most effective--and annoying--pitches.
While the pop-up inventory has shrunk in recent months, it's been a boon for small and midsize publishers and desktop software makers that still serve the ads.
But when there's a will, there's a way.
Some publishers, still clinging to the ad revenue from pop-ups, are exploiting a workaround in IE and other Web browsers to send pop-up ads despite blocking software. In one example, visitors to the Drudge Report Web site who use the Service Pack version of IE or Mozilla.org's Firefox browser with a pop-up blocker will nevertheless receive a pop-under ad if they click a link on the page.
"Pop-ups are a cat-and-mouse game," said Bart Decrem, a spokesman for the Mozilla Foundation, creator of Firefox. "We are continually improving our pop-up blocker, and content developers are constantly developing a way to get around the pop-up blockers."
The mice are scoring points. Several online ad-serving and media executives said that while the pop-up inventory has shrunk in recent months, it hasn't fallen as dramatically as one might expect with installations of SP2 and other blocking technology. And according to figures from researcher Nielsen/NetRatings, pop-up and pop-under advertising comprised 6 percent of the total online ad impressions in September, the same as it did in October of 2003.
What's more, the slight market contraction has been a boon for small and midsize publishers, and desktop software makers, that still serve the ads. According to several Internet publishers and ad networks, they've raised rates on pop-ups and pop-unders by between 10 percent and 30 percent in recent months. And desktop software makers such as Claria, formerly Gator, are sold out of their inventory, according to sources.
"Pop-up blockers have affected our delivery of pops and, as a result, we have increased the (cost per impression) by as much as 30 percent," said C.J. Wolf, CEO of iWin.
Other ad executives are happy not only about the increase in rates but also by the performance of the ads. "What is also affecting the price is the fact that individuals who are not using pop-up blockers are more likely to be those users who have traditionally found them to be less annoying and intrusive," said Chris Berman, of the ad network Dedicated LA, who said that on average, 50 percent to 60 percent of Web users are now actively using pop-up blockers.
"What we are seeing is not just a shortage of supply but also an increase in performance," Berman said.
Pop-ups have played a controversial role in the world of online advertising since the dot-com bust, when the ads started coming out in force. At the time, Net publishers of all stripes were starved for ad revenue and willing to let advertisers get in their visitors' faces. Consumers complained loudly, and publishers slightly acquiesced by introducing the less-intrusive pop-under, which springs up behind a Web page.
Eventually, the backlash forced major publishers, such as Yahoo, MSN and America Online, to rethink their pop policies altogether. In the last year, many top-tier publishers have stopped selling pop-ups or pop-unders. Meanwhile, smaller publishers have chosen to limit the frequency with which they show the ads.
The pullback, however, hasn't curbed demand from direct marketers, ad executives say. Advertisers such as X10, Orbitz and Netflix have built businesses around blanketing the Web with promotional windows and driving clicks. That demand is still extremely high among direct marketers, because pop-ups and pop-unders are among the most effective ads on the Internet, garnering click rates two to 10 times higher than standard banners, in some cases.
"Sure, it's effective, and so was Tony Soprano's style of management," said Greg Stuart, CEO of the Interactive Advertising Bureau, which has introduced guidelines for pops-ups and pop-unders. "I don't believe in effectiveness at any cost. Some people are abusing the medium."
The money is tough to pass up for some publishers, however.
A Microsoft spokesman said the company has received few complaints about such tricks, but he said people still might get pop-ups from intranet applications or spyware installed on their machines. "Our sense is also that many unwanted pop-ups are those that are opened via a user click (for example, click a link to a new page, on navigation, a pop-up is opened.) We needed to allow these for site compatibility," he said, adding that stricter blocking controls in advanced settings let people stop this, too.
"When this setting is enabled, an override key can be depressed while clicking a link," he said.
A major source of pop-up advertising is desktop applications, which are not generally affected by browser-based pop-up blockers. Software makers like and WhenU blanket their users with 10 to 20 new browser pops a day while they surf the Web. The desktop software ad market has been in high demand, too. According to Claria's S-1 initial public offering filing from earlier this year, the company reported profits of about $35.6 million last year on revenue of about $90 million. The company also has 425 advertisers, including Cendant and pending acquiree Orbitz.
A new approach
While some ad companies are figuring out workarounds to deliver pop-ups, others are developing new ad formats.
Roy de Souza, CEO of ad technology company Zedo, said his company has created a so-called intromercial that acts much like a pop-up but doesn't spawn an added window. When a visitor requests a Web page, the intromercial will appear before the requested content. "So far, it's the most popular alternative to pop-unders," he said.
Undertone Networks, one of the largest providers of pop-unders, is making up for a shortfall in inventory by selling formats like the intromercial to its clients, which include ESPN and Fox News, according to company CEO Michael Cassidy.
He said that for pop-unders, the company has raised rates by 10 percent to 15 percent, or to about $7 for every thousand delivered. (A year ago, advertisers could buy pop-unders by the thousand for about $2.50, by some estimates.)
Falk eSolutions, which sells technology to deliver online ads, has said its software will deliver "the guaranteed pop." When its ad server detects pop-up blocking software on a person's machine, it will deliver what's called a floating ad, or rich-media ad, instead. Many publishers such as Ifilm and AtomShockwave are practicing this technique so as not to lose ad revenue.
And then there's just plan old trickery, like that of the Drudge Report.
"If adopted by other Web sites, pop-ups will be back," said Richard Smith, a security consultant who operates the site ComputerBytesMan.com.
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