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Online Advt: Year of Living. Dangerously
 

Online Advt: Year of Living. Dangerously

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Review of all the major risk factors and changing landscapes at play in online marketing.

Review of all the major risk factors and changing landscapes at play in online marketing.

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    Online Advt: Year of Living. Dangerously Online Advt: Year of Living. Dangerously Presentation Transcript

    • What about it?
    • TV 36.8% NEWSPAPERS Surpass in 11 25.1% MAGAZINES Surpass in 10 12.8% ONLINE 10.9% RADIO Surpassed in 07 10.2% Surpassed in 06 OUTDOOR 3.8% CINEMA Surpassed in 97
    • Who Advertises?
    • Who Advertises?
    • Online ad revenue $20.2 Billion (2007) $25.9 Billion (2008) $62.4 Billion (2012) $147 Billion (2012) (global)
    • And Who Doesn’t •Political Ad Revenue Up 155% from 2004 •But only 2.5% of $3 billion market
    • Uncertain Times • Barclay’s – US ad revenue to fall approx 9% over next two years – Online ad revenue will continue to grow at a slower double digit pace • IAB – Q2 Report - $11.5B revenue (up 15.2%)
    • Uncertain Times • Barclay’s – US ad revenue to fall approx 9% over next two years – Online ad revenue will continue to grow at a slower double digit pace • IAB – Q2 Report - $11.5B revenue (up 15.2%)
    • • Behavioral Targeting • Key Word Search • CAN-SPAM Update • FTC and State Enforcement
    • Seattle Beacon October 14, 2008 PAGE TWO TELESCOPE SALES BOOM IN ALASKA ANCHORAGE. Alaska telescope retailers have reported a huge spike in telescope sales in September. According to store owner Joe Monegan, local foreign policy experts are buying the telescopes to watch Russia in light of its recent 34 invasion of Georgia. (More on Page 4) SEATTLE’S SOGGY SODS Got Sun? CITY BREAKS RECORD FOR CONSECUTIVE RAINY DAYS SEATTLE. Forget Spain, the rain falls mainly in Seattle as the Emerald City “enjoyed” its 34th consecutive day of rain breaking the 1953 record. Sonny Smith, President of the Visitors and Convention Bureau was quick to point out that even with the record, the city still gets far less total rain than cities such as Miami. In fact, Seattle is not even among the top 101 cities for We got plenty in Palm Springs total rainfall. So remember, it could be worse – you could be in Miami. www.sunsunsun.com
    • Seattle Beacon October 14, 2008 PAGE TWO TELESCOPE SALES BOOM IN ALASKA ANCHORAGE. Alaska telescope retailers have reported a huge spike in telescope sales in September. According to store owner Joe Monegan, local foreign policy experts are buying the telescopes to watch Russia in light of its recent 34 invasion of Georgia. (More on Page 4) SEATTLE’S SOGGY SODS Got CLE? CITY BREAKS RECORD FOR CONSECUTIVE RAINY DAYS SEATTLE. Forget Spain, the rain falls mainly in Seattle as the Emerald City “enjoyed” its 34th consecutive day of rain breaking the 1953 record. Sonny Smith, President of the Visitors and Convention Bureau was quick to point out that even with the record, the city still gets far less total rain than cities such as Miami. In fact, Seattle is not even among the top 101 cities for total rainfall. So remember, it could be worse – you could be in Miami.
    • Seattle Beacon October 14, 2008 PAGE TWO TELESCOPE SALES BOOM IN ALASKA ANCHORAGE. Alaska telescope retailers have reported a huge spike in telescope sales in September. According to store owner Joe Monegan, local foreign policy experts are buying the telescopes to watch Russia in light of its recent 34 invasion of Georgia. (More on Page 4) SEATTLE’S SOGGY SODS Got Elvis? CITY BREAKS RECORD FOR CONSECUTIVE RAINY DAYS 20TH ANNUAL CRUSHED VELVET SEATTLE. Forget Spain, the rain falls mainly in ELVIS ART SHOW Seattle as the Emerald City “enjoyed” its 34th consecutive day of rain breaking the 1953 Who needs Picasso when you can record. Sonny Smith, President of the Visitors have the King?. and Convention Bureau was quick to point out that even with the record, the city still gets far TICKETS ON SALE NOW less total rain than cities such as Miami. In fact, Seattle is not even among the top 101 cities for total rainfall. So remember, it could be worse – you could be in Miami.
    • BT 1.0 User Tracked by • Website • Adware Program • Ad Network BT 2.0 User Tracked by ISP (“Deep Packet Inspection”)
    • BT 1.0 Response • 40% to 111% increased response due to BT (Boston.com) Revenue • 2008: $775 MM (3% of online ad spending) • 2012: $4.4 BB (8.6% of online ad spending)
    • 2007: A Year in the Limelight Merger Mania Other News • AOL Accidental Release of User Search Histories (2006) • Google Reveals Search History Kept Indefinitely • Facebook’s Beacon program • FTC Workshop on Behavioral Targeting • Consumer Groups Call for “Do Not Track” Registry
    • Washington Responds Self- FTC Proposed Self-Regulatory Principles • Notice: A consumer-friendly and prominent notice that data is used for BT • Choice: Give consumers the ability to opt-out • Security: Must provide reasonable security and retain only as long as needed • Sensitive Data: Express consent for use in BT Congressional Investigations • Privacy Implications of Google-DoubleClick Merger • Potential Microsoft-Yahoo deal
    • BT 2.0 Is it legal? Probably. Do I think it's a good idea and it makes sense? No. I don't think it passes the creepy factor, and this market isn't ready for stuff that doesn't pass the creepy factor. We are not in a place where we can do dumb things and stupid things like that, even if they're effective. -- Dave Morgan Tacoda Founder and former CEO
    • Congress Responds • Incredible leap into the breaching of the privacy of Americans – Rep. Markey • Isn't that just wiretapping – Sen. Dorgan • Contemptible – Rep. Greene • Senior House members send letters to over 30 ISPs: has your company at any time tailored . . . Internet advertising based on consumers’ Internet search, surfing, or other uses?
    • • ISP Response – Cancel NebuAd tests – Will provide opt- out mechanism • NebuAd – Shelves BT 2.0 – Other 2.0 companies may not survive
    • But aren’t we forgetting something?
    • What about the offline world? Reported Data Breaches Q4-07 14% 28% Brick & Mortar GENERIC FOODS GENERIC FOODS E-Commerce for you and on you We got the goods We got the goods Government Education 26% 4% Medical & Other 28% Average American has 4.3 loyalty cards
    • Coming to a C-SPAN Near You in 2009
    • Search is the largest segment of online advertising . . . . IAB/PWC 2007 Revenue Report
    • Search is the largest segment of online advertising . . . . IAB/PWC 2007 Revenue Report because it produces results. Case study: Provenance Hotels experienced an increase ROI of 2,700% through SEO and paid search.
    • Lanham Act Section 43 Any person who, on or in connection with any goods or Civil Liability services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof . . . which is likely to cause confusion . . . as to the affiliation . . . the origin, sponsorship . . . of his or her goods . . . by another person in commercial advertising . . . misrepresents the nature, characteristics, qualities, or geographic origin of [the] goods is likely to cause dilution by blurring or . . . tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion
    • [A] mark shall be deemed to be in use in commerce— (1) on goods when . . . placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale… (2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce…
    • [A] mark shall be deemed to be in use in commerce— (1) on goods when . . . placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale… (2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce… ONE VIEW: Keyword bidding not use in commerce since it “is strictly internal, and, because such use is not communicated to the public, the use does not indicate source or origin of the mark”
    • Use in Commerce Only the Second Circuit has found that an $8.6 billion industry You Are Here is not involved in commerce.
    • Does Bidding on Competitor’s Trademark Constitute Infringement? Likelihood of confusion among judges
    • Initial Interest Confusion Use of another trademark “in a manner calculated to capture initial consumer attention, even though no actual sale is finally completed as a result of the confusion.” B Tal Brookfield Communications Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999).
    • Rationale • Improperly Benefits From Goodwill of Trademark • False Detour From Information Super-highway – Analogy to false detour sign directing consumers to take wrong exit. “Unable to locate West Coast, but seeing the Blockbuster store right by the highway entrance, they may simply rent there..” Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1062 (9th Cir. 1999) • Bait and Switch – “Initial interest confusion can be viewed as a variation on the practice of ‘bait and switch.’” 3 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition § 23:26 (4th ed. 2003).
    • “The initial interest confusion doctrine is a mess."
    • Counterpoint • Not a Detour, Merely a Lane Change – Web surfers are accustomed to false starts and are unlikely to be dissuaded when they end up at the wrong site. Chatam Int'l v. Bodum, Inc., 157 F.Supp.2d 549, 559 ED PA 2001). • No different than supermarket placing products. store brand next to branded products – FragranceNet.com, Inc. v. FragranceX.com, et al. No. 06-CV-2225 (JFB)(ART)(E.D.N.Y., June 12, 2007) • Legally Significant Confusion? – “The [District] court’s refusal to enter the ‘initial interest confusion’ thicket is well taken given the unlikelihood of ‘legally significant’ confusion.” Hasbro Inc. v. Clue Computing, Inc., 232 F.3d 1, 2 (1st Cir. 2000).
    • Non-Doctrine Standard • No Liability If Trademark Not Displayed – Keyword advertising is a “use in commerce,” but cannot confuse consumers if the ultimate search results do not display plaintiff’s trademarks. J.G. Wentworth SSC Ltd v. Settlement Funding LLC, No. 06-0597 (E.D. Pa. Jan. 4, 2007).
    • CAN-SPAM Act of 2003 CAN-SPAM IS . . . CAN-SPAM DOES NOT . . . • An anti-fraud and • “Can Spam” – except for disclosure statute wireless spam • Applies to an email • Include a “Do Not Email where the “primary Registry” purpose” is commercial advertisement or • Impose an “ADV” promotion of a product labeling requirement or service • Create a general private right of action • Have a volume requirement
    • CAN-SPAM Principal Requirements From line must identify initiator Subject line must not be deceptive. Adult Messages must provide notice. UCE must be identified as “advertisement” Requires Working Opt-Out Postal Address for Advertiser Mechanism for Advertiser
    • Regulatory Timeline 2004: FTC Final Rule on Adult Labeling FCC CAN-SPAM Rules 2005: FTC (1) Final Rule on Primary Purpose of Email; and (2) Proposed Discretionary Rules 2006: 2007: 2008: FTC Final Discretionary Rules
    • Discretionary Regs Definition of Valid Physical Address • Accurately registered P.O. Box allowed Opt-Out Requests Conditions or Expiration • Cannot impose any conditions on opt-out requests – (e.g, fee or provide information) • Abandons proposal to reduce processing time to 3 days • Rejects call for expiration period for opt-out requests
    • Designated Sender Rule Must Be a • Name must be in the “From” Sender Under Line CAN-SPAM • Must be Responsible for Cannot designate CAN-SPAM compliance Non-Sender • Dropped requirement that Designated Sender be in control of the content or the mailing list used
    • “Sender” Liability • FTC unsuccessful in seeking strict liability • Advertiser liable if “actual knowledge, or by consciously avoiding knowing” about affiliate violations – Hypertouch v. Kennedy- Western University Strict anti-spam policies and policing of affiliates defeated allegation of intent. – ASIS Internet Services v. Opt-In Global, Inc. No duty to investigate
    • CAN-SPAM Plaintiffs • FTC • State AGs • Internet Access Service Provider (IASP) – Adversely Effected by Violation • No Consumer Private Right of Action
    • Is the IASP Remedy a Trojan Horse? Kennedy- Hypertouch v. Kennedy-Western University • Small, free service can qualify. . • Concern that Hypertouch is a professional plaintiff can only be addressed by Congress • Opens door to litigation by anti- spam activists as faux-IASPs Hypertouch and its principal have filed approx. 40 cases under CAN-SPAM and/or California law
    • Is Gordon a Proper Plaintiff? • Gordon v. Virtumundo – Continued to use other people's e-mail addresses to collect spam . . . for generating lawsuit-fueled revenue – No harm related to • Bandwidth • Hardware • Internet connectivity, network integrity • Overhead, staffing or equipment costs
    • No! • Not Plaintiff Congress had in mind – must Followed in Cal demonstrate Federal Court substantial harm ASIS Internet Services v. OPTIN Global • Awards Defendant (N.D. Cal. 2008) Attorneys’ Fees – suit “ill-motivated, unreasonable, and frivolous”
    • CAN-SPAM PREEMPTS ALL STATE REGULATION OF EMAIL EXCEPT STATE LAWS • Regulating falsity or deception in email • Not specific to email, including State trespass, contract, or tort law; or • Other State laws to the extent that those laws relate to acts of fraud or computer crime
    • • Misrepresentation must be material State Preemption • States cannot dictate form of from line Case Law – Cannot prohibit use of multiple domains. – Not misleading to use non- corporate address where domain may be checked using “Who Is” • State regulation must be based on traditional notions of fraud • First Amendment requires that it not impinge non- commercial email
    • Preemption’s Back Door? • Utah/Michigan Child Registry Laws – Makes sending prohibited email a “computer crime” – Free Speech Coalition, Inc. v. Shurtleff, Utah Federal Court refused to enjoin law finding it fell within exception for computer crime • DOJ filed brief supporting this position • New Colorado Spam Law – Makes violation of CAN-SPAM a violation of state deceptive practices and computer fraud laws – Is this a backdoor to creating private right of action under CAN-SPAM?
    • AB 2950 • Pushed by anti-spam activists who have filed over 100 suits • Wish list – Advertiser liability – Prohibiting use of multiple domains – Tactics to evade email filters – Expand Plaintiffs to include District & City Attorneys – Venue – Restore Statute of Limitations to 3 Years
    • www ≠ Wild West West
    • Increased State Enforcement The Majors New York Continues to be activist post-Spitzer under Andrew Cuomo Texas 80 Arrests First Three Years Washington Five spyware lawsuits since 2005 New Kids on the Block Florida Established in 2007. Investigating 10 companies over “Free ” promotions Kansas Launched in September 2007
    • FTC & State Enforcement •Deceptive Advertising – The High Cost of “Free” •Unfair Practices – Data Security – will impose sanctions if security not adequate for type and volume of data collected – Drive by Downloads
    • FTC Consent Decrees QUALIFICATIONS TO “FREE” OFFERS MUST: • Be in the same color, font, and color, size and within close proximity • Disclose if purchase required • Disclose all monetary and non- monetary (e.g., credit card application) obligations a consumer is likely to incur to obtain the advertised gift.
    • Florida 3 Zone Standard • All zones must be “above the fold” / visible to consumer w/o scrolling • All font types must conform to Web Standard size equivalencies • W3C Color Contrast standard applies to all disclosures in all zones (125 min.) • All disclosures must be visible at all times throughout the order path
    • Tallahassee Three Step • Zone 1 – Price and 2- Zone 2- Types of Content Term ($9.99 per (Ringtones and Other Text month) Services) • Must be disclosed entirely • Must be disclosed no greater within 125 pixels in any than 20 pixels from the Offer direction from the cell Description (Get 10 Bonus submit field and the P.I.N. Ringtones) code submit field. • 12pt. minimum font size • Other Text Services can be no smaller than 50% of the font size • Must be disclosed in of the Offer numerical format 0-9 and include $ and without any • Description (Get 10 Bonus other text except Ringtones) Minimum font size is price/term 20pt. Zone 3 – Age / Other T’s and C’s • Age description must be above T’s and C’s. Minimum 12pt. font size.
    • Online Gambling US: Online gambling/ads are illegal • Google, Microsoft & Yahoo: $31.5 million settlement with DOJ (Dec. 2007) • DotNet sites are illegal unless – There are no web links to an online gambling site; and – Home page has disclaimer stating the site is purely educational Online Gambling Liberalization in Europe • Still highly regulated
    • Antigua v. United States WTO Battle over Online Gambling • WTO: To the extent online gambling was allowed within the U.S. (some states permit online gambling for horse racing), foreign companies were entitled to equal access to this market • Awarded $21MM/yr in damages which may be recouped by suspending IP protection for US goods – US-Antigua negotiations ongoing • EU may bring similar claim – Damages in billions – Decision expected by end of the year
    • Selected Cases I Keyword Advertising Use In Commerce • NO: Rescuecom Corp. v. Google, Inc., 456 F.Supp.2d 393 (N.D.N.Y., September 28, 2006) • YES: Playboy Enterprises, Inc. v. Netscape Communications Corp.. 354 F.3d 1020 (9th Cir., Jan. 14, 2004) Initial Interest Confusion Doctrine • Brookfield Communications Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999). Questioned by • Chatam Int'l v. Bodum, Inc., 157 F.Supp.2d 549, 559 (ED PA 2001). • FragranceNet.com, Inc. v. FragranceX.com, et al. No. 06-CV-2225 (JFB)(ART)(E.D.N.Y., June 12, 2007) • Hasbro Inc. v. Clue Computing, Inc., 232 F.3d 1, 2 (1st Cir. 2000).
    • Selected Cases II CAN- CAN-SPAM ACT Preemption • Omega World Travel, Inc. v. Mummagraphics, Inc., 469 F.3d 348 (4th Cir. 2006) • Kleffman v. Vonage Holding Corp., Case No. CV 07-2406GAFJWJX (C.D. Cal. May 23, 2007) • Gordon v. Virtumundo, Inc., Case No. 06-0204-JCC (W.D. Wash. May 15, 2007) • Virginia v. Jaynes, No. 062388 (Va. September 12, 2008) IASP Standing • ASIS Internet Services, v. Optin Global, Inc., 2008 WL 1902217 (N.D. Cal. March 27, 2008 ) • Hypertouch v. Kennedy-Western University, 2006 WL 648688 (N.D. Cal. 2006) No Strict Liability • US v. Impulse Marketing, No. CV05-1285RSL (W.D. Wash. June 8, 2007) • US v. Cyberheat, 2007 U.S. Dist. LEXIS 15448 (N.D. Ariz. 2007)
    • Selected Cases III Online Gambling • United States – Measures Affecting The Cross-border Supply Of Gambling And Betting Services. Recourse to Article 21.5 of the DSU by Antigua and Barbuda, Report of the Panel, World Trade Organization, WT/DS285/RW (07-1209), March 30, 2007. FTC Guidelines • Dot Com Disclosures: Information About Online Advertising • Advertising and Marketing on the Internet: The Rules of the Road • FTC Policy Statement Regarding Advertising Substantiation • FTC Guides Against Deceptive Pricing
    • Bennet Kelley Bennet Kelley is founder of the Internet Law Center in Santa Monica where he helps clients navigate the challenges of the digital economy. He has been active in many of the hottest Internet issues over the past decade including cyber squatting, internet marketing and promotions, online gambling, net neutrality, privacy and spam. Bennet is the Vice-Chair of the California State Bar's Cyberspace Committee and is a regular contributor to the Journal of Internet Law. Bennet worked in-house with companies such as ETM Entertainment Network, SpeedyClick.com and ValueClick prior to launching the Internet Law Center. www.InternetLawCenter.net The Internet Law Center’s newsletter, Monday Memo, recently was named one of the top 100 Internet Law resources. . Contact: Internet Law Center 100 Wilshire Blvd, Suite 950 Santa Monica, CA 90401 310-452-0401 bkelley@internetlawcenter.net
    • Future Presentations November 3 • Email Compliance: Foundation of Reputation & Deliverability, Direct Marketing Association (New York) November 21 • Affiliate & Direct Marketing, PMA Promotion Marketing Law Conference (Chicago)