Advertisers may face public humiliation over adware

Such a move might help in the battle against adware, FTC Commissioner Jon Leibowitz said Thursday at an event here hosted by the Anti-Spyware Coalition. Adware is software that displays pop-up ads on PCs, often after Internet searches.

"I think that could have a beneficial effect," Leibowitz said in an interview. "In this context, maybe shaming a company on how they are spending money might inure to the benefit of consumer's privacy."

The FTC would publicly announce and publish the name of a company that advertises using adware that installs itself surreptitiously on consumer PCs or by using spyware, Leibowitz said. He would recommend publicly shaming advertisers to the other FTC commissioners if the adware problem doesn't decrease, he said.

The idea is a good one, several attendees at the Anti-Spyware Coalition event said. However, Trevor Hughes, executive director of the Network Advertising Initiative, called it "drastic action."

"There are well-intentioned advertisers out there that do not understand where their ads are appearing," Hughes said. "It is easy to shame those advertisers, but that does not solve the problem."

The deeper issue, Hughes said, is the way online advertising is handled. Many companies let a third party take care of their advertising and that company may delegate even further, involving many people and companies before an ad gets placed.

Already advertisers face pressure from consumers not to promote their products or services using adware or other software that consumers may not want on their PC, said Jules Polonetsky, vice president of integrity assurance at America Online.

"Increasingly advertisers are recognizing that this is not a minor issue," Polonetsky said. "There is already an environment out there where prominent advertisers' missteps are being written about."

Among those who have exposed advertisers is blogger Ben Edelman, a Harvard doctoral student and spyware expert.

AOL has a policy not to advertise using adware. To maintain that policy, the company has to keep close tabs on those companies that handle its advertising, Polonetsky said.

"If you simply rely on a policy that you announce or simply rely on a promise from your partner, you invariably will be burned," he said. "In today's networked world you have to do due diligence to ensure your brand does not show up in an offensive location."

Keeping track of contractors
The online advertising world is full of go-betweens that handle advertising. One such company is AzoogleAds, which delivers ads for a number of clients, including online auctioneer eBay, credit reporting agency Experian, Web video rental outfit Netflix, and DVD and music club Columbia House, according to the company's Web site.

AzoogleAds used to display many of its ads through adware, including software from WhenU. Today it is limiting that to 5 percent of all ads it serves up, still including WhenU, said Don Mathis, AzoogleAds' chief operating officer.

"Advertisers rely on us to provide this service for them," Mathis said. "Two years ago nobody ever thought about adware, but everything from enforcement action to legislation has raised the profile of the risk and liability associated with it."

Shaming advertisers is the right answer, Mathis said. "It would not hurt our customers, the legitimate players. This was a grey area for five years; the grey is now being separated into black and white."

Bill Day, chief executive officer of WhenU, also agreed that public humiliation might work to root out the bad actors in his industry. "It is not a wholesale solution, but an important part of what is required," he said.

Like AOL's Polonetsky, Day said that some public shaming is already happening. "Companies are not blind, they see consumer complaints about spyware and bad practices," he said. "I am adamant about driving the bad practice people out because until they are out, we get lumped in with them."

WhenU's software is installed on about 12 million PCs. The ad-serving software is bundled with about 80 other applications, including the BearShare peer-to-peer file-sharing application. For such applications WhenU enables the publishers to make some money while delivering the software at no cost to users, Day said.

WhenU claims to have cleaned up its act and has abandoned the practices of paying third-party distributors for each installation of its software, essentially promoting surreptitious installs of its application. Other adware and spyware applications still get installed onto consumer PCs with user consent or knowledge, experts said here.

Aside from public humiliation for the advertisers, the adware and spyware companies also face the wrath of the FTC. Commission Chairman Deborah Platt Majoras, in a speech at the Anti-Spyware Coalition event earlier on Thursday, said the FTC would win the battle against adware and spyware.

"The dissemination of harmful, unremovable programs that frustrate consumers' ability to control their own computers is digital carjacking, and we intend to vigorously prosecute it," Majoras said.