Advertisers Leery of Marketers Methods

Beltway observers say the chances are good that some kind of anti-spyware law will be enacted by Congress this year.

With two anti-spyware bills gaining passage in the U.S. House of Representatives, Beltway observers say the chances for some kind of anti-spyware law being enacted by Congress this year are good.

But experts warn that new laws will go only so far toward ending the plague of spyware on users desktops.

An equally effective tool may be pressure from advertisers and institutional investors that forces online marketing companies to clean up their business practices.

While lawmakers in the Senate wait to take up the anti-spyware issue, there is evidence that advertisers are growing wary of the practices of some online marketing companies—a development that could force big changes at marketers such as Claria Corp., 180Solutions and Direct Revenue LLC.

/zimages/6/28571.gifRead more here about current anti-spyware bills.

Pressure on online marketing companies is coming from all quarters. Anti-spyware activists such as Harvard University Law School student Ben Edelman have drawn attention to brand-name companies, such as The Walt Disney Co. and FTD Inc., that patronize online advertisers such as Gator and 180Solutions.

The Washington-based Center for Democracy and Technology recently asked leading corporations that advertise online to reconsider their support of companies that engage in questionable practices, such as drive-by installations, in which users arent notified before adware is placed on their machines.

/zimages/6/28571.gifClick here to read David Courseys commentary on Googles responsibilities in the spyware battle.

Corporations, especially in regulated industries, are increasingly wary of bad exposure from being linked to aggressive online companies such as 180Solutions, said Rob Gaudio, director of client services at MEA Digital LLC, an interactive advertising agency in San Diego.

MEA works for a number of large companies, including HSBC Bank USA N.A., Oakley Inc. and Calloway Golf Co., according to Dave Herscott, co-founder and managing partner.

Scrutiny of adware and spyware problems makes clients such as HSBC reluctant to advertise online, Gaudio said. "[HSBC is] under great scrutiny by their legal department, and privacy is a big issue. ... It forces them to stay out of [online advertising] completely," he said.

Other companies, such as Oakley, are open to online advertising through channels such as Web site affiliates but demand scrutiny of those sites.

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