Large lead generation firms including ValueClick and possibly 12 others as of this year have been monitored by the vigilant eyes of the Federal Trade Commission, which is on a perceived mission to cease all illegal and unethical lead generation practices. 

ValueClick in particular was investigated for its possible violations of CAN-SPAM practices.  According to the FTC, the CAN-SPAM Act, “establishes requirements for those who send commercial mail, spells out penalties for spammers and companies whose products are advertised in spam if they violate the law, and gives consumers the right to ask emailers to stop spamming them,” (www.ftc.gov/bcp/conline/pubs/buspubs/canspam.shtm.)

The FTC’s investigation of ValueClick focused on their emailing practices.  According to ValueClick reports, the FTC inquiry alone caused a significant publisher fallout and a loss of 10 million dollars in Q3 earnings.

Incentive-based leads are one of the major reasons why lead generators, and online marketers in general, have come under recent fire.  Incentive-based leads, especially ones of of high value (”Free iPod!” for example), are under fire due to their ability to garner personally identifiable information (or PII), which is then sold to lead buyers without the customer knowing.

There are several lead generation organizations that strive to promote ethical lead practices emphasizing both the presence and continued need for standardization.  One such organization, the Interactive Advertising Bureau (IAB) created the Online Lead Generation Best Practices, a set of ethical practices intended for all online marketers.  The recommended practices cover data transfer processes (indicating that processes should be singular and straightforward and not sent to third parties without permission), a standarization of operational formats that ensure data is encrypted, to educating advertisers and publishers to make certain they provide detailed information to consumers that explains how their information will be used. 

Meanwhile, the FTC threatens to remove all PII incentive based leads, which would result in an estimated 40% loss in revenue - a major hit to online marketers everywhere.  ValueClick continues to do business as usual, however, as with any potential industry chokehold, new, inventive ways of doing business always come about.  

We’ve done it to telemarketers and internet advertisers are next.  The Federal Trade Commission’s ”do not call” campaign has taken a new life in the form of a proposed “do not track” initiative, which if passed, will allow people to block internet advertisers from tracking their online activity.  Online advertising is a multibillion dollar industry and consumer data is the lifeblood that sustains it.  Advertising giants to niche affiliate networks track consumer patterns meticulously and use the data to tailor ads per the consumer’s online habits.  This is known as behavioral advertising and something the privacy group that created the propsoal, the Center for Democracy and Technology, believes violates individual privacy.

The proposed “opt-out” list would work like this: advertisers that set cookies on consumers’ computers would have to give the FTC all domain names on servers used to place the consumer(s).   Advertisers would not be allowed to collect personal or financial information and if allowed to track ads, have to notify the consumer of the behavioral tracking procedures and allow for consent.  Third party auditors would see to it that these standards are met. 

The Center for Democracy and Technology submitted the proposal to the FTC earlier this week with talks currently underway.  The following excerpt comes directly from the proposal.

“The online tracking and targeting of consumers - both in its current form and as it may develop in the future - needs to be limited so that consumers can exercise meaningful, granular preferences based on timely and contextual disclosures that are understandable on whichever devices consumers choose to use.”

What does this mean to the thousands of advertisers and affiliate networks that rely on ad tracking to determine what ads go where and are sent to whom? For now - analysts believe the big engines will be hit first - Google, Yahoo!, AOL, and Microsoft.  Remember however, this is a $14 billion dollar industry, with billions more spent on online advertising acquisitions.  Proponents of online ad tracking claim consumers receive targeted ads they actually want to see versus random banners, pop-ups, welcome screens and more that they have no interest in. 

143 million people have opted out of the ‘no call’ registry.  It’s unknown at this point what the repercussions would be should something similar occur with the internet.