United Virtualities Directs Ads Toward VoIP Users

United Virtualities is offering at no charge software that consumers can use to manage their PC-originated telephone conversations in return for having advertising displayed in the product.

The new software is the latest example of how companies are testing voice over Internet protocol as a potential advertising channel. Yahoo Inc., for example, lets users of its ad-carrying instant messaging service talk over the Internet via a PC microphone and headset, and America Online Inc. is testing a VoIP service.

United Virtualities's HotRecorder can be used with many PC-based VoIP services, such as those from Skype Technologies SA, Net2Phone Inc. and Yahoo.

Once downloaded, HotRecorder launches every time users access their VoIP programs. The ad message is displayed within a window where users also have access to tools to record, store, search, send via e-mail or playback conversations.

In addition, users can add entertaining sounds to recorded conversations before sending them to someone else via e-mail.Mookie Tenembaum, founder and chief executive of United Virtualities, said Tuesday that the ads are targeted to the demographic information given by consumers when they sign up for the software. Currently, that information is limited to age, gender and zip code.

Tenembaum says there's no spyware, pop-up ads or other features that could potentially turn off consumers. Instead, the company is only trading the software for advertising.

"We are living in a world in which we get content in exchange for advertising in TV, newspapers and more," Tenembaum said. "The idea here is to offer something that will also be useful to the user."

An ad-free version of HotRecorder is available for consumers willing to pay $15. Since its availability Monday, there's been more than a 1,000 downloads of the version available at no charge, Tenembaum said.

VoIP is an emerging technology that has a faster growth rate among companies than consumers, experts say. Companies are adopting Internet telephony to reduce the use of traditional telephone services, which are more expensive.Consumers, however, are expected to migrate to VoIP services in greater numbers eventually, as the major carriers offering VoIP over their high-speed Internet services step up marketing and bundle VoIP with other products.

But whether consumers will want to see advertising while talking on the telephone is open to debate. Service providers in the early days of the Internet, for example, offered dial-up access at no charge in return for advertising, Joe Laszlo, analyst for JupiterResearch, a division of Jupitermedia Corp., said. Those companies failed when the Internet-advertising market collapsed, and haven't made a comeback in the recovery,

"In much the same way, (VoIP) telephone-service companies have to be careful about offering consumers a value proposition where they're expected to put up with a significant amount of advertising," Laszlo said.

In addition, consumers generally trust paid services more than free services, and view the former as providing higher-quality products, Laszlo said.

"It's a tough call whether consumers want ad-supported phone services," he said.Nevertheless, Tenembaum believes people will accept advertising, if they get something useful in return.

"The only chance for advertising (to succeed) long term is if we give something in exchange," he said. "You need the goodwill of the consumer."

In addition to HotRecorder, United Virtualities sells online advertising technologies to marketers, ad agencies and web publishers