Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
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In fact, technology may run ahead of any legislation. English of interMute says consumer reaction to the AdSubtract software has been positive. The company has done little marketing to consumers to achieve the 500,000 installations it boasts. “Our marketing has been through the web site and mostly word of mouth,” he says.
AdSubtract is only one of a number of such blocking technologies. It operates on a proprietary database of ad servers. When a user connects to one of those ad servers, the software blocks the ad and any cookies. The standard version of AdSubtract blocks ads and cookies coming in from ad servers and is free from the interMute web site. AdSubtract Pro costs $29.95 and includes a cookie manager that highlights cookies from ad servers in red and other cookies that a consumer may want to keep, such as from a favored retailer or an online brokerage, in green. This allows a user to manage cookies, not just block the ad-server cookies.
One fourth of AdSubtract’s customers have downloaded the software to protect their privacy, English says. Half have downloaded it to block ad clutter and the remaining fourth do it speed up page downloads.
InterMute has agreements with major modem vendors to include the software on a CD in the modem box. It has deals with Zoom, Hays, Viking and Best Data modems and expects to announce three more soon. English says 70% of modems sold at retail in North America will include AdSubtract by the end of the summer. InterMute also is working with PC manufacturers to install AdSubtract on hard drives.
But the success of such software as AdSubtract could end up costing consumers, say opponents of ad- and cookie-blocking software. In fact, those costs to consumers could increase by 3.5% to 11%, says a study just released by the Information Services Executive Council, an arm of the Direct Marketing Association. The organization estimates that apparel retailers’ inability to gather customer data would add $1 billion a year to online and catalog apparel sellers’ marketing costs, an amount equal to 6.5% of a $15 billion market, by forcing them to cast a wider net for prospects.
Further, the Information Services Executive Council argues that opt-in marketing, which many consumer advocates champion, doesn’t work either because it favors large firms with name recognition, thus imperiling small web-based companies and creating a barrier to entry. Further, argues the Software and Information Industry Association, requiring opt-in would set the default procedure at no-information, leaving retailers and marketers no choice but to turn to more costly ways of gathering data.
But English argues that no matter the consequences, consumers still have a right to privacy. “The ends can’t justify the means,” he says. “Consumers shouldn’t have to be concerned that every time they do a transaction with anybody on the web the information is up for grabs with every other marketer on the web.”
In the end, it’s back to the balancing act for retailers. “The real problem here,” says Whittaker of the NRF, “is figuring out ways to craft something that gives consumers the feeling that their privacy is protected, but in a way that they don’t lose the benefits of good customer service.” That’s sure to keep the issue alive for some time.