Online advertising conference: advertiser perspectives

Panel on Advertiser Perspectives on Online Advertising

Moderator: Eric Goldman, High Tech law Institute

Jeffrey Rohrs, ExactTarget

Explosive growth in targeted and untargeted ads—above the line (direct marketing, direct phone) or below the line (mass media) have both multiplied in possible tactics (SMS for above, Twitter for below, just as a couple of examples).

Jason Schultz, Samuelson Law, Technology & Public Policy Clinic

What does it mean to be an advertiser? Individuals can purchase ads to convey messages.

He expects more TM lawsuits over ads that appear in context: AdWords placement could differ for every single user and every single page view. Also, more lawsuits over user-generated content used as advertising. There’ve been a number of attempts to put material out for users to remix. Who’s the advertiser? Chevy Tahoe remixes—the advertiser is still Chevy. With Quiznos, there’s a false advertising issue, but it could also be trademark or copyright infringement. Likewise, the AdultFriendfinder case: the personal ad at issue was used as a teaser—advertising for the service. But those ads could appear anywhere. This is a problem of user-generated content.

Another issue: lawsuit against Blockbuster for Facebook’s Beacon service. Large ad networks that use user info could draw advertisers into litigation.

Rohrs: 95% of the legal issues he was discussing in 2001 have yet to be resolved today. The speed with which marketing environment is changing far outpaces what anyone can do to keep up.

Email behind the scene is the core of internet marketing. CAN-SPAM doesn’t require opt-in, just a business relationship. Best practices: confirm opt-in. There are nefarious folks renting or selling lists—clients may consider “buying” a list that’s not subscriber-based. Keep your ears perked: you never want your client to purchase email addresses, unless you’ve got a very clear opt-in chain. Preferred practice: “rent,” in which a person sends a message on your behalf and you provide the creative. But those tactics underperform compared to having a relationship of your own. Email has the highest ROI (return on investment) of any tactic, when limited to your own subscriber base--$48 for every dollar spent. It’s a long-view medium that’s too often handled with short-term employees.

Goldman: There tends to be fingerpointing about who’s responsible for downstream harm. Advertisers fund spyware/adware, but there are layers between them and the download. What responsibilities do they have to manage the ecosystem created by the activity they fund?

Rohrs: Get as much info as you can about distribution, but even Google only recently began to provide more on/off functionality with contextual search. Past problem: no means of exclusion. Now, led by fears of click fraud, you have more on/off capability, but the reality is that automation is the key to Google’s success. The more manual controls marketers have, the less likely they are to use them—how likely are you to read a privacy policy? Advertisers have so much to deal with; only big spenders can afford to deal at the granular level. There’s an inherent risk in the medium especially as you get away from the biggest players.

Alissa Cooper, Center for Democracy & Technology

It’s useful for advertisers to look at this as brand protection. You don’t want your ad above an adult video store, or in a software program users hate. You’re never going to be perfect, but when you sign up with affiliates, you may be unable to control the smallest, most numerous players. Try to keep as much control as possible through having contracts in place. Affiliates’ motivation is to place as many ads as possible as cheaply as possible, which leads to adware, typosquatting, and spam.

Schultz: It’s good to let small advertisers compete, but that means more risks, especially for advertisers that aren’t actually businesses, like individuals or nonprofits.

Rohrs: Marketers are now trying to tame the Wild West. Affiliates are good at getting your ads into the cracks of the internet. They only make money if you make a sale, which is a different motivation than your own marketing team. They’ll do anything, unless you tell them they can’t (and sometimes even then). A big change in the last few years: some marketers say “you can’t buy our TM”—no paid search. Some are now allowing sale of some select terms because affiliates are better at monetizing.

Cooper: 20-30% of adware ads were from high-profile brands a few years ago; there has been a learning curve, some from negative reputation of the marketing model and some because the NY AG settled with some advertisers, bringing the point home that big advertisers needed to pay more attention.

Goldman: Is contract enough?

Rohrs: A big company needs a dedicated affiliate manager who’s in the loop for all the types of marketing the affiliates are doing. Moreover, when it comes to the internet, what a user sees in Cleveland will differ from what you see in NYC, so you need to be aware of that and watch for red flags.

Goldman: Doesn’t that degrade the ROI? Isn’t that expecting more of advertisers online than off?

Cooper: No, the way you meet expectations is different. Controlling whether your ad is above an adult bookstore is done differently than controlling where your internet ad appears, but they’re both brand protection.

Schultz: The dynamic nature of content is a challenge. It’s hard to keep records of what the ad was, where it was, etc.

Rohrs: High ROI in the past may have come from people who didn’t comply with the law—you do have to put more bodies on your ads than you did 5 years ago. 5 years ago SEO was simple to put your client at the top of Google; now it’s harder, and there are more legal issues from bidding on keywords.

Cooper: FTC’s proposed definition of behavioral ads may also include contextual ads—may be based on your activity of the moment, not just your activity history, and doesn’t distinguish between first- and third-party ads. Comments to the FTC thus reveal disagreement over the appropriate breadth of the definition. There’s a question about “what is context?” What about my last 3 searches, or where I’ve been on the site today, or moving from CNN to AOL which are owned by the same company? Conceptually it may be clear, but in practice it might get muddy. Advertisers need to know what they can target based on—page context, demographics, web browser, etc. They need to understand what web publishers are trying to sell them: what does “behavioral targeting” mean? It’s not clear from publishers’ ads. Advertisers should be careful about what they’re getting.

Goldman: TM keywords?

Rohrs: He thinks it’s nasty free riding, but doubts there’s confusion. Aciphex, a new competitor to Prilosec and Prevacid, will buy ads based on searches for those. This may be an issue for legislative resolution. Placement in stores is different because people expect to see a million different brands in stores, whereas if I search for Prilosec I expect to get Prilosec, and people talking about Prilosec.

As a marketer, other people’s brands aren’t great for marketing, because the clickthrough is not great, and then the ad quality goes down and our link drops off the radar. So the market may be dealing with this. Consumers aren’t idiots. If you search for one brand and see another, you’re not going to be confused. But investment in creating unique brands can be very high, and we should ask about legislative protection.

Goldman: Some consumers do use the leading brand as a keyword to access the class of goods of which the brand is a representative.

Rohrs: All the more reason for the leading brand to be ticked off.

Schultz: This may be changing constantly, making legal regulation difficult. The unexpected search result may be the most fun—a video, or information about a friend you didn’t know. There can be social benefit to being surprised: serendipity.

Q: Adteractive was recently fined $600,000 for misuse of “free” on its ads. Comments?

Rohrs: The CMO of Kodak told a story—they sponsored Celebrity Apprentice. One of the challenges was about their new color printer, which could save consumers money on ink. The celebrities condensed “up to 50% off” into “save 50%” and now Kodak is in the crosshairs of an FTC complaint. Language matters. (Talk about a user-generated content problem!)

Schultz: Law tries to have thresholds or proxies for liability. Compared to people who put material up for free on the internet, business entities are inevitably going to be held to a higher standard of behavior.

Rohrs: And remember competitors are policing the environment. A competitor raised the Kodak issue with the FTC.

Goldman: He didn’t find the issue all that interesting, since the FTC has had rules about “free” for a very long time. But some of what they were trying to do was game the affiliate network through the use of “free” offers.

Cooper: Those ads are huge in adware: super-annoying lead generation ads, and it baffles her that this is a real business model and that the only problem appears to be the word “free.”

Bracha: Seems like responsibility is being pushed back up the advertiser chain. Is that good?

Schultz: It’s hard to tell. Example of worrisome case: Marvel v. NCSoft, lawsuit over City of Heroes because people were creating player characters like the Hulk. He worries about the chilling effect on innovation if you push liability up too far or too strictly.

Cooper: In spyware/adware, a multipronged approach is most successful. Some advertiser liability/settlement out of fear of state AGs, but distributors are also being held liable, and antispyware software empowers the consumer to keep the bad stuff off computers.