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Yahoo and Claria

When Yahoo acquired Overture in September 2003, it may have bought itself a load of trouble.

Prior to the Yahoo acquisition, Overture had cut a deal with Gator (which has since changed its name to Claria Corporation) to display Overture pay-per-click advertising to users of the Gator Advertising Information Network (GAIN). As we've noted in earlier investigations, this deal took many Overture customers by surprise. When we contacted some Overture advertisers in September 2003, several were unaware that their ads were now being shown to Gator users and one indicated to us that they had discontinued their Overture advertising as a result.

Several months into Yahoo's ownership of Overture, very little has changed. This is especially puzzling when you actually go through Yahoo sites with a Claria product installed on the PC. The pictures below show that adware and spyware programs degrade an Internet user's experience. Yahoo seems to understand that this is a problem, which is why their new Yahoo Toolbar includes a feature they call Anti-Spy that can remove these programs. Yet Yahoo continues to be the lifeblood of a company that degrades the experiences of their own site visitors.

Claria hampers Yahoo Search

PC Pitstop first noticed this issue last year, in our evaluation of Claria's Search Scout. When a user with a Claria application installed uses Yahoo Search, they receive a standard set of Yahoo results with Overture listings at the top. Then, a few seconds later, they often receive a full-screen pop-under window from Claria Search Scout.

Seeing double: Yahoo Search and Claria Search Scout are both powered by Overture, so why would Yahoo want Claria pop-ups on its own site?

Since Search Scout uses Overture's paid listings as well, Claria's window has the exact same listings as the Yahoo search results. If the user clicks on the Yahoo listings, Yahoo directly handles the revenue, but if the user clicks the Claria listings then Claria gets some cut of the revenue and only pays Yahoo a lesser percentage. With the ink barely dry on the Yahoo-Overture deal at the time, we believed that Yahoo would address this obvious problem relatively quickly. We were wrong.

On paper, Claria may be able to say they "make money" for Yahoo by paying them that percentage. Yet the screen shot makes it pretty clear that Claria actually takes money from Yahoo in this case. In addition to the financial harm, add the poor impression it must give a visitor using Yahoo Search to see the pop-under window that includes the same links. At best, they'll be confused, thinking the site is slightly broken. At worst, they will believe that Yahoo is directly responsible for the annoying pop-under window. (Wait, they're right; Yahoo is responsible for this mess!)

Claria hampers Yahoo Shopping

Imagine if you went into your local Target store and were met at the door by someone who told you that the deals were better at the Wal-Mart across the street. That would be strange. Well, imagine that the person who told you that was paid by Target. Now we're talking crazy talk. Unless we're at Yahoo Shopping.

Trouble in store: With a Claria product installed, visitors at Yahoo Shopping find themselves assaulted by multiple pop-up windows asking them to shop elsewhere.

Yahoo Shopping includes merchants large and small, great product variety, and a flexible interface to browse or search for products across all the participating stores. Merchants pay Yahoo for the privilege of having their products listed, and some merchants even have their entire sites hosted by Yahoo. Yahoo's support of Claria is degrading that shopping experience, for both its visitors and merchants.

The screen shot at left shows an example of what happens when a Claria user visits Yahoo Shopping. As we browsed through the Yahoo Shopping site, Claria's software collected information about the pages we were viewing. Within two seconds of each other, Claria's software opened both the center pop-up for flowers and the full-screen pop-under for women's clothes. Clicking the the pop-up ad results in a lost sale for Yahoo Shopping, it is a Claria ad that is not even affiliated with Overture. Clicking links in the Search Scout window is a big win for Claria, a small win for Yahoo's Overture division, and another big loss for the merchants of Yahoo Shopping. It's very puzzling that Yahoo would put so much effort into a shopping portal if they have decided that it's more profitable to work with Claria to filch customers off their own sites. Perhaps they should let their Yahoo Shopping partners know about this change of plans.

Yahoo's test of character

Some ideas seem really good until they end up in your own back yard. When Internet properties the size of Yahoo's meet a "contextual advertising" service the size of Claria's, it's nearly impossible for Claria's pop-up ads to avoid Yahoo's back yard.

At this point, Yahoo seems to have three courses of action. One is to leave things as they are, but that seems destructive to Yahoo's visitors, its shopping partnerships, and its own financial interests. A second approach, basically the "easy way out" for Yahoo, would be to quietly tell its partner Claria to not display pop-unders on Yahoo properties. This solves Yahoo's immediate problem, but through its Overture division Yahoo would continue to support the very behavior it had prohibited from its own site.

The best course of action, for both Yahoo's visitors and their business partners, would be for Yahoo to dissolve their partnership with Claria and acknowledge that this class of software is not in the best interest of anyone but Claria. Yahoo has already made a similar statement by including the Anti-Spy feature with their new Yahoo Toolbar. Why shouldn't the company send a clear and consistent message across all its business divisions?

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