The video website Blinkx is contesting a Harvard professor's analysis that accuses the company of charging advertisers for video ads that users rarely see.
Ben Edelman, an associate professor at Harvard Business School, published a technical analysis of the company's services earlier this week that claims to have found suspicious advertising software wrapped into Blinkx applications.
"Few users would affirmatively request adware that shows extra pop-ups, so Blinkx uses deceptive tactics to sneak adware onto users' computers," Edelman wrote in the paper.
After Blinkx's share price tumbled on Thursday, the company issued a statement saying it "strongly refutes the assertions made and conclusions drawn in the blog post."
It said that Edelman was paid for the research by an unnamed third party. In the report, Edelman disclosed that some of the information came from research he did for a client "that prefers not to be listed by name." Blinkx didn't provide further details about its objections and company officials couldn't be reached for comment.
Edelman has periodically published reports for years on what he sees as deceptive online advertising practices. His latest report was prepared with help from Eric Howes, a principal lab researcher at ThreatTrack Security, and Matthew Mesa, a researcher at the same company.
Edelman said via email on Wednesday he had not been in touch with Blinkx.
In the report, Edelman wrote that an application called "Weather Alerts" appears to be a version of Zango, a product from an advertising software company of the same name that Blinkx purchased in 2009.
Zango settled with the Federal Trade Commission in November 2006 for $3 million after concern that distributors of its software were installing it on peoples' computers without their consent, often by exploiting vulnerabilities in operating systems or Web browsers.
Weather Alerts was bundled in a package of applications with a Google Chrome browser installer, which would appear to violate Google's terms and conditions, Edelman wrote.
If installed, the Blinkx/Zango software engages in so-called "lead-stealing," Edelman wrote. If a person navigates to Walmart.com, the software displays a pop-up window that redirects them to Walmart.com again.
"Thus, Walmart ends up having to pay an affiliate commission on traffic it already had," Edelman wrote.
The company's main website, Blinkx.com, saw a surge of traffic in December, which Edelman said appears to come from Zango-related software that forces users to the main website.
Data from web analysis firm Alexa shows that "of the top ten sites sending traffic to Blinkx ... six are Blinkx servers, largely used to forward and redirect traffic," he wrote.
Much of the high-quality video that Blinkx advertises, such as the popular U.S. news program "60 Minutes," aren't there or lead to different video clips, Edelman wrote.
In one test, Edelman wrote he clicked on a Blinkx link that supposedly went the broadcaster cbs.com's website, "but the link actually took me to a 1:33 minute home video of a dog lying on the floor."
Advertisers lose out as well, Edelman contents. Video ads are triggered to play as a user exits a web page in order to view other linked content, he wrote.
"Because the supposed content opened in a new tab, the prior tab remained active and could still host a video player with advertising," Edelman wrote. "Of course the prior tab was necessarily out of visibility: Blinkx's code had just commanded the opening of a new tab showing the new destination. But the video still played, and video advertisers were still billed."
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