Viewpoint to Plunge Into Adware

Viewpoint will develop a behavioral targeting product in 2006, execs said during the company’s Q3 earnings call.

It will work by collecting clickstream data on users who have installed the Viewpoint media player, then using that data to target ads and content on the company’s partner sites. Viewpoint claims 120 million users have installed its player.

CEO Patrick Vogt announced the behavioral tech in the wake of a downbeat quarter for Viewpoint and its ad systems unit in particular, which includes Unicast. Viewpoint reported a net loss of $1.5 million on total revenue of $6 million.

Execs blamed the poor earnings on several factors, including weakness in the company’s sales and marketing organization and publisher integration problems with its new Fuse ad management platform.

Capitalizing on advertiser demand for user behavior data could bring a gush of revenue. However, it’s a risky strategy given Internet users’ privacy concerns and an unsettled legislative environment around desktop software that gathers user clickstream data. The company will likely encounter a significant backlash unless it loudly and explicitly warns users of its new tracking practices — and maybe even if it does.

In an interview after the earnings announcement, Vogt insisted Viewpoint would comply with all laws and maintain a high standard of privacy.

“We’re going to be conservative,” he said. “We can’t afford not to do the right thing for the users… and the enterprises.”

He declined to elaborate on the offering, but said it will be introduced by the second quarter of 2006.

The adware move is only one part of what appears to be a general strategy of diversification at Viewpoint. Vogt also said the company will expand its creative services, historically focused on rich media production, into more of a full service offering.

“No longer will customers have to work through multiple companies for creative, media buying… and ad serving,” he said. “Viewpoint will do it all.”

That strategy will put the company into direct competition with ad agencies, whom Vogt said Viewpoint has relied on too much to convey the value of its products to advertisers. The company will also lower silos between its divisions, a move it hopes will increase business from existing customers, and create a consulting practice, which it says will bring in new ones.

Corrected & Retracted: An earlier version of this story indicated specific Viewpoint partners are aware and approve of the future behavioral marketing product. ClickZ regrets the error.