Ive put a lot of thought into this and I don't know if im covering most of the risks but heres what I got:
*Users installing your toolbar claiming its a virus
*Users getting annoyed by pop ups
*Virus scanners picking up your toolbar
What other major things am I missing?
*huge investment
You need an adware, and something to get installations. Thats the more expensive part from my experience. You need games, or utilities, or something like PageRage. That shit can be expensive to develop.
Cheap adware will end up being marked as spyware or worse. If you keep it all above board you still need an air tight EULA and I'd recommend having a lawyer look that over.
Consider the fact that you'll need to drive a LOT of traffic to get your first round of installs, so you need money (and a traffic source) to get those installations.
Want to take your downloadable to a network? You're looking at a minimum of a five figure deposit with most networks worth a damn. And then you get to deal with affiliate fraud and shitty quality leads, etc.
It's a big process setting up a private PPV network and I wouldn't suggest you tackle it unless you really know what you're doing and have the cash flow to back up the decision.
I think you'd really need a good piece of software that people would actually find useful. Even the most legitimate downloads are often flagged by antivirus companies, and if a large company flags you, you could potentially lose a huge % of your installs if they blacklist you.
About annoying the users, I think some adware waits a while after install to start popping ads so that the user doesn't necessarily associate the ads with the download.
Another issue is monetization. If you're trying to make your money back by advertising CPA offers to your audience, or selling your traffic to advertisers, you don't really know how valuable the traffic is until you test it out.
Most adware has a 2-4 week buffer between installation and showing ads. That's why when people install gamevance to spy on tv they complain about not seeing shit after installation.
+1 on Brian's point about monetization. Unless you develop the downloadable package to entice a certain demographic your installations will be all over the place, both literally and figuratively. You'll need to find a way to segment your traffic to make it worth anything to anyone.
Can you further explain on how companies such as future ads segments the demographic?
Really great info so far thanks guys!