Targeted Net Ad Firm Lands $45M

Adding another wrinkle to the thorny debate over Internet privacy, Predictive Networks, a developer of targeted cross-network advertising and marketing, announced Tuesday that it has secured $45 million (US$) in a third round of funding.

Following a recent flurry of accusations that they are prying into the surfing and purchasing habits of consumers, Internet marketing companies are growing increasingly anxious over the possibility that government intervention could inhibit industry growth.

Predictive, however, asserts that its delivery system sets it apart from similar marketing firms. According to the company, the software protects the privacy of users by anonymously tracking clickstream data, such as what sites a person has visited, without using cookies.

Vision Rewarded

Investors seem to be attracted to Predictive's technology. The Cambridge, Massachusetts-based startup says it has raised $54 million since its inception, proving that the appetite for targeted advertising services continues to grow.

The software is used by such Internet service providers as PSINet and AT&T WorldNet.

Predictive said it plans to use the funds to introduce its software to wireless and cable television networks, increase its penetration of the U.S. electronic advertising market and establish a presence in Japan and Europe.

The latest infusion was led by Battery Ventures and Advent International. Additional backers include investment firm C.E. Unterberg Towbin, Japanese carrier Nippon Telephone and Telegraph, online phone company Net2Phone, market researcher NetRatings and PSINet.

Privacy Concerns

The formation of Web profiles has raised the hackles of privacy advocates, who fear that such stealth technology will allow Internet marketing companies to combine the information they harvest online with offline demographic data such as household income, the number of family members and existing mortgage balances.

Predictive uses artificial intelligence to map user clickstream data and create personalized advertising that it thinks subscribers will respond to, based on their online interests and characteristics.

Predictive said it provides subscribers with ID numbers that do not reveal their identity and once the clickstream data is analyzed, it is discarded.

In addition, the company said it employs permission-based software, which requires users to give their consent before they are tracked. Subscribers are also able to opt-out at any time.

Alliance Proposes Privacy Standards

In related news Monday, in light of the public scrutiny online advertisers have drawn in recent months, a coalition of industry giants, including DoubleClick, 24/7 Media, ClickAction, Digital Impact and CMGI's Yesmail.com, announced plans to propose standards meant to ease consumer concerns about spam and online privacy. The group, the Responsible Electronic Communications Alliance (RECA), said it will harness its efforts to adopt universal messaging and e-commerce benchmarks that take into account consumer privacy and the needs of ISPs.