Adware accusations send Blinkx shares tumbling

UK-based online video search engine, Blinkx, has endured a torrid time on London’s AIM stock exchange, with 50% wiped off its valuation after the firm was accused of deploying adware. Shares in Blinkx, which was spun off from enterprise software firm Autonomy in 2007, plummeted after the claims made by Harvard Business School professor, Benjamin Edelman, in a blog post, slashed GBP350m (USD575.9m) from the company’s market cap.

Edelman asserts that he discovered a number of adware programmes deployed by companies working close to Blinkx, designed to track consumer activity and defraud advertisers by charging for traffic referrals that never occurred. Blinkx has built its business on serving ads around its video search engine, making the allegations particularly damaging. The firm’s shares have begun to rally after Blinkx issued a statement flatly denying the reports.

Damaging

Adware is commonly referred to as third party software that is installed on consumers’ computers without permission or through deception, such as being bundled with separate software that a consumer is actually seeking to download. The programmes are often hard to detect and uninstall, tracking consumers’ web habits and fraudulently selling traffic to advertisers. Edelman’s accusations relate to two companies bought by Blinkx, Zango and AdOn, which were both known for deploying adware prior to the acquisitions.

Blinkx has enjoyed 100% year-on-year growth since floating on the AIM in 2007 by targeting the fast-growing video ad market. The firm’s revenues for the six months ending September 30 hit USD112m, with profit jumping 76% to USD18.1m. More broadly, global online video ad spend hit USD5bn in 2013, up 30% year on year, according to PricewaterhouseCoopers.