Friday, October 16, 2009

IAB Calls For Reversal Of ‘Unfair and Unconstitutional’ FTC Blogger Regs

The Interactive Advertising Bureau is calling on the Federal Trade Commission to withdraw its recently revised guidelines governing dealings between bloggers and marketers. The ad trade group says the rules “unfairly and unconstitutionally” impose penalties on online media for practices, while exempting traditional media. Furthermore, in an open letter to FTC Chairman Jon Leibowitz, Randall Rothenberg, the IAB’s president and CEO, says the FTC’s distinction between offline media and online media, “constitutionally dubious” by invoking the First Amendment right to free speech. Release

Apart from the separate treatment of social media and traditional news organs, the IAB’s dispute zeros in on the FTC’s warning of an $11,000 penalty against bloggers for failing to disclose free promotional products from marketers they discuss online. The FTC very quickly sought to downplay the worries about the fine, after a firestorm grew following the release of the new guidelines, which were last updated in 1980.

As our Staci D. Kramer reported last week, Richard Cleland, assistant director, division of advertising practices at the FTC, said the “$11,000 fine is not true. Worst-case scenario, someone receives a warning, refuses to comply, followed by a serious product defect; we would institute a proceeding with a cease-and-desist order and mandate compliance with the law. ... There’s no monetary penalty, in terms of the first violation, even in the worst case.” Instead, he said the FTC’s guidelines are intended to serve as education.

But there are still some doubts out there about whether the FTC means that. The IAB wants to make sure that no fines will be handed down and therefore wants the FTC to put it in writing.
“They—and we—are not arguing that bloggers and social media be treated differently than incumbent media,” says Rothenberg’s letter. “After all, most newspapers, magazines, radio stations and television networks, in recognition that Americans are embracing new forms of social communications, have established their own blogs, boards, Facebook pages, Twitter feeds, and the like. Rather, we’re saying the new conversational media should be accorded the same rights and freedoms as other communications channels.”

Tuesday, October 13, 2009

Yahoo Settles Lawsuit - lawyers win, advertisers lose.

Yahoo Inc. has reportedly settled a class action lawsuit with some of its search advertising customers who weren't happy about where their ads were showing up.

Lawsuit administrator Rust Consulting sent an e-mail to members of the group that preliminary court approval of the settlement has been granted and posted copies of court documents here.

Yahoo customers who sued claimed that when ads they placed through "Sponsored Search" and "Contact Match," they showed up in spyware, domain name parking sites, typosquatting sites and other undesirable locations on the Web.

They sued the Sunnyvale company (NASDAQ:YHOO) for breach of contract, unjust enrichment, misrepresentation, civil conspiracy, and unfair business practices.

As part of the settlement, Yahoo agreed to offer a new filtering option for ads, and to modify how it handles disclosures and click fraud investigations:

It also agreed to develop and offer a way for customers to control where their Yahoo Ads appear.

Advertisers got screwed again, of the $4.3 million settlement, $4.17 million is going to the lawyers.

Friday, October 9, 2009

3M In Click Fraud Over Two Weeks? Just The Beginning

A recently disbanded click fraud ring in China racked up $US3 million worth of clicks in two weeks. $US3 million that we’re aware of. Just how detectable is this whole business of racking up fraudulent ad revenue clicks?

That intricate mess of lines above represents a portion of DormRing1, the click fraud bunch that was caught in China. The lines show the relationship of some of the IP addresses involved in the fraud and how they are connected to some fraudulent ad clicks. The whole network actually “involved 200,000 different IP addresses and racked up more than $US3 million worth of fraudulent clicks across 2,000 advertisers in a two-week period”. Impressive and scary at the same time.

The trouble is that no one really knows how much ad revenue DormRing1 collected before they were caught. Click-fraud monitoring services such as Anchor Intelligence, the ones behind this catch, are evolving to keep up with the scale on which these rings are operating. It’s still difficult to judge just how well they’re doing as they’re having to infiltrate forums and gain the trust of the perpetrators in a manner reminiscent of drug busts. But as the criminals are getting more elaborate, the investigations are too.

Thursday, October 8, 2009

FTC Publishes Final Guides Governing Endorsements, Testimonials

Changes Affect Testimonial Advertisements, Bloggers, Celebrity Endorsements
The Federal Trade Commission today announced that it has approved final revisions to the guidance it gives to advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act.

The notice incorporates several changes to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, which address endorsements by consumers, experts, organizations, and celebrities, as well as the disclosure of important connections between advertisers and endorsers. The Guides were last updated in 1980.

Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor.

The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.

Celebrity endorsers also are addressed in the revised Guides. While the 1980 Guides did not explicitly state that endorsers as well as advertisers could be liable under the FTC Act for statements they make in an endorsement, the revised Guides reflect Commission case law and clearly state that both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement – or for failure to disclose material connections between the advertiser and endorsers. The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.

The Guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.

The Commission vote approving issuance of the Federal Register notice detailing the changes was 4-0. The notice will be published in the Federal Register shortly, and is available now on the FTC’s Web site as a link to this press release. Copies also are available from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,700 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

MEDIA CONTACT:
Betsy Lordan
Office of Public Affairs
202-326-3707

STAFF CONTACT:
Richard Cleland
Bureau of Consumer Protection
202-326-3088

Wednesday, October 7, 2009

FTC Disclosure Rules Affect Bloggers

The Federal Trade Commission has approved final revisions to guides concerning the use of endorsements and testimonials in advertising, which address endorsements by consumers, experts, organizations, and celebrities, as well as the disclosure of important connections between advertisers and endorsers. The guides were last updated in 1980.

Bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. The revised guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement.
"We were expecting this [from the FTC] and have had guidelines in place to on what to do, when they are blogging, to disclose their relationship," Emilio Amodei, founder of BlogVertise, said during a session at Search Marketing Expo East here on Oct. 6.

Good news for the merchant or the product-pusher though: If a blogger breaks the rules, the blogger has to pay the fine, which could be upwards of $11,000 per offense, according to Amodei. BlogVertise acts as a middle man between product-pushers and bloggers who subscribe to the service.

But Amodei says he is not sure how the FTC is going to enforce the new rule, and thinks the logistics could get tricky. “Let's say it's a foreign blogger,” Amodei said. "They're not going to go to India and fine someone for not disclosing a relationship."

Monday, October 5, 2009

Study: All ages concerned with privacy issues

When it comes to private information it isn't only Boomers and Seniors who have concerns. Contrary to popular belief, the younger generations are also concerned about their private information - despite the fact that most have always used computers and the Internet.
by Kristina Knight

Professors from the University of California - Berkeley and the University of Pennsylvania have released the results of a joint study which indicates that young people and old are concerned about private information getting into the wrong hands. They found that approximately two-thirds of all consumers polled said they did not want tailored content if that meant they would be tracked via the Internet.

Other interesting findings include:

• 66% of respondents reported that tailored/targeted ads 'did not appeal'
• 55% of 18-24 year olds reported not wanting tailored ads and 37% reported not waiting tailored discounts
• 54% of 18 - 24 year olds report not wanting tailored news
• For those over age 65, 82% report not wanting tailored ads and 68% report not wanting tailored news

"It's a warning sign that we have to be careful about generalizations," said Joseph Turow, professor at the Annenberg School for Communication, University of Pennsylvania (via MediaPost). "For some reason marketers think because young adults grew up with the Internet they don't mind being tracked and targeted with online ads."

In defense of targeting capabilities such as behavioral, which is how much information about consumers is compiled, many experts in the field say the information collected can and usually is anonymous. Meaning that consumers need not worry that personal information is easily available.

Experts not involved in collected this data say consumers responded the way they did likely because of the way the questions were asked. They say that had the questions been worded slightly differently consumers would not have been as negative.

Friday, October 2, 2009

Two-Thirds of Americans Object to Online Tracking

ABOUT two-thirds of Americans object to online tracking by advertisers — and that number rises once they learn the different ways marketers are following their online movements, according to a new survey from professors at the University of Pennsylvania and the University of California, Berkeley.

Joseph Turow, lead author of a study on consumers’ feelings about online tracking, said, “The most important thing is to bring the public into the picture, which is not going on right now.”

The professors say they believe the study, scheduled for release on Wednesday, is the first independent, nationally representative telephone survey on behavioral advertising.

The topic may be technical, but it has become a hot political issue. Privacy advocates are telling Congress and the Federal Trade Commission that tracking of online activities by Web sites and advertisers has gone too far, and the lawmakers seem to be listening. Representative Rick Boucher, Democrat of Virginia, wrote in an article for The Hill last week that he planned to introduce privacy legislation. And David Vladeck, head of consumer protection for the F.T.C., has signaled that he will examine data privacy issues closely.

Marketers are arguing that advertising supports free online content. Major advertising trade groups proposed in July some measures that they hoped would fend off regulation, like a clear notice to consumers when they were being tracked.

The data in this area, however, has been largely limited to company-financed research or Internet-based research, which survey experts say they believe is not representative of all Americans. So the study — among the first independent surveys to examine this issue — has attracted widespread interest.

“This research is going to ignite an intense debate on both sides of the Atlantic on what the appropriate policy should be,” said Jeffrey Chester, executive director of the privacy group Center for Digital Democracy, which did not work on the study.

The study’s authors hired a survey company to conduct interviews with 1,000 adult Internet users. The interview, which lasted about 20 minutes, included questions like “Please tell me whether or not you want the Web sites you visit to give you discounts that are tailored to your interests.” The results were later adjusted to reflect Census Bureau patterns in categories like sex, age, population density and telephone usage.

Tailored ads in general did not appeal to 66 percent of respondents. Then the respondents were told about different ways companies tailor ads: by following what someone does on the company’s site, on other sites and in offline places like stores.

The respondents’ aversion to tailored ads increased once they learned about targeting methods. In addition to the original 66 percent that said tailored ads were “not O.K.,” an additional 7 percent said such ads were not O.K. when they were tracked on the site. An additional 18 percent said it was not O.K. when they were tracked via other Web sites, and an additional 20 percent said it was not O.K. when they were tracked offline.

The survey company also asked about customized discounts and customized news. Fifty-one percent of respondents said that tailored discounts were O.K., and 58 percent said that customized news was fine.

On the advertising question, there was not a big difference between age groups. Marketers often use teenagers’ behavior on Facebook as anecdotal evidence that they do not mind handing over information. But 55 percent of respondents from 18 to 24 objected to tailored advertising.

“We sometimes think that the younger adults in the United States don’t care about this stuff, and I would suggest that’s an exaggeration,” said Joseph Turow, lead author of the study and a professor of communication at the Annenberg School for Communication at the University of Pennsylvania. His co-authors are professors at Berkeley’s law school and at the Annenberg Public Policy Center at the University of Pennsylvania.

The survey also asked nine true-or-false questions about privacy laws to see how knowledgeable Americans were about protection, including “If a Web site has a privacy policy, it means that the site cannot share information about you with other companies, unless you give the Web site your permission.” (The correct answer is “false.”) On only one question, regarding sweepstakes, was answered correctly by more than half of respondents.

Finally, the survey sought opinions on laws regarding tracking, asking if there should be a law that gave people the right to know everything a Web site knew about them. Sixty-nine percent of respondents said yes. Respondents also overwhelmingly supported a hypothetical law that required Web sites and advertising companies to delete all information about an individual upon request; 92 percent endorsed it.

“I don’t think that behavioral targeting is something that we should eliminate, but I do think that we’re at a cusp of a new era, and the kinds of information that companies share and have today is nothing like we’ll see 10 years from now,” Professor Turow said. He said he would like “a regime in which people feel they have control over the data that marketers collect about them. The most important thing is to bring the public into the picture, which is not going on right now.”

Stuart P. Ingis, a partner at the law firm Venable who represents the industry trade groups’ self-regulation coalition, said that the industry was taking steps to explain to consumers how behavioral targeting worked.

“The more people understand the practices and how the data is actually being used, that’s when the concerns disappear,” he said. Just because many Americans are not in favor of something does not mean it should be banned, he said, citing negative feelings about taxes.

But Mr. Chester, whose group is part of a privacy coalition calling for Congressional action, said the survey would be helpful. “This research gives the F.T.C. and Congress a political green light to go ahead and enact effective, but reasonable, rules and policies,” he said.