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Admittedly, this is a strange title for an antispyware blog, but there’s good reason for it. In order to understand the “enemy”, you have to understand the mind of the enemy (and pardon me for using such a harsh term as enemy, but many users feel that’s a perfect term to describe adware on their systems).

Adware “works” for two groups alone: Adware developers and advertisers.

It’s enormously profitable. In fact, it’s probably a much more profitable business to be in than making antispyware tools such as Counterspy.

(Veteran spyware warriors won’t find anything new in this blog, but many people relatively new to the spyware business will be surprised at these statistics.)

Take a look at Claria’s SEC Form S-1. Claria, formerly Gator, filed this form to go public but later withdrew their IPO in August 04 “in light of current market conditions”.

Perhaps it’s the finance wonk in me that is interested in these numbers, but check this out:

In 2000, they had $3.8 million in sales. Just three years later, they had $90 million in sales, with $26 million in operating income, 28% of sales. In the software business, you’re happy if you get to between 10 and 20% operating income.

In short, a great business. And investors know it. Take a look at this list of investors for adware companies. These are not shady investors. In fact, many are the blueblood of the investment community.

Next in funding adware are the advertisers themselves. One would think that adware vendors typically get their advertising support from peddlers of gray-market viagra and the like. However, that’s not always the case. Take a look at some of this advertiser data. There are big name brand operations using it.

Why? You can’t sell advertising if there’s no ROI. And adware has delivered a revolution to advertisers, because now you can do something that is a marketer’s dream: TARGETING.

It’s pretty obvious that good ads go to waste when placed in front of the eyeballs of the wrong demographic. Adware allows advertisers to specifically target people based on their online behavior. Someone who buys lots of books online may get an ad for a bookstore, and so on. I’ve mentioned this before, but it’s worth taking a minute to review Claria’s flash tour of how their system works.

So targeting/relevannt advertising and just the plain ability to get lots of ads out ot lots of people is why adware works.

Alex Eckelberry

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