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Hyperbole compromises credibility of FTC mobile ads complaint

By Peggy Anne Salz

Is mobile about to become the new battleground in a clash between consumer rights groups and the wider advertising community?

It sure looks that way if we consider the complaint filed earlier this month by the Center for Digital Democracy and the U.S. Public Interest Research Group with the Federal Trade Commission (see story).

The groups claim deceptive practices throughout the mobile advertising industry and ask the commission to launch an investigation into the privacy implications of marketing practices targeted at mobile phone users.

While the 52-page document highlights some valid concerns, it also exaggerates the intent and ability of the some 50 vendors listed in the complaint to threaten privacy and consumer welfare.

This hyperbole is unfortunate as it seriously compromises the credibility of the complaint and clouds the core issues that the mobile industry must address, such as improved citizen education about the costs and benefits of providing personal data.

Searching for answers
Take the example of ChaCha, a people-powered search service I have tracked since it launched its mobile service and subsequent mobile advertising solution last year.

The complaint charges that this mobile search is guilty of a "covert approach" to mobile advertising. It bases this observation on ChaCha marketing material which states: "There's no complicated opt-in process -- users are part of ChaCha when they ask their first question, and your valuable message or offer is integrated naturally into the answers they receive."

Since when do search engines -- online or mobile -- require opt-in before serving up paid search advertising linked to keywords or, in the case of ChaCha, natural language queries? As a rule, search services don't.

Thus, the claim that ChaCha or any other mobile search service breaches the strict opt-in procedures that operators and advertisers are advised by the Mobile Marketing Association to follow before collecting our personal data is patently false.

At the other end of the spectrum, Xtract, a Finish provider of social marketing intelligence, may be overzealous about its ability to analyze social networks within large scale mobile communication networks and ultimately identify the key influencers, or so-called Alpha Users.

But at no point does Xtract -- nor can it -- connect the dots between our mobile phone purchases, profiles and past click-behavior, and our individual identities. Mobile subscriber data is kept completely anonymous, and consumer data is hidden.

Put another way, Xtract's methodology is not about enabling advertisers to target individuals. In fact, Jouko Ahvenainen, cofounder and vice president of Xtract, tells me [his] advertisers have no interest in identifying or targeting us as individual consumers in the first place.

Xtract is designed from the ground up to map users against categories of interest to identify the defining characteristics of new micro-segments and enable the delivery of relevant advertising according to rules similar to the ones we know from companies such as Amazon.

These rules suggest content on the basis of its relationship with other content -- items you like are like these -- or our own relationship with other consumers -- people like you like this.

Finally, an examination of what the complaint calls three "egregious examples" of unfair and deceptive practices within the mobile advertising agency by AdMob, Bango and Marchex exposes an unfortunate disconnect between what vendors can actually do and what the groups claim they can.

Minding data
Bango, for example, assigns individual mobile users a unique user ID -- a digital fingerprint that works in a similar way to cookies on the PC Web -- allowing its customers a record of consumer activities and behavior in much the same way that online companies use cookies on the PC Web to deliver a personalized service.

As I also know from my own mobile advertising experiments using the ad networks and mobile analytics tools provided by AdMob and Bango, the Bango user ID effectively allows publishers to distinguish between new and repeat users, and therefore quantify the number of unique visitors to a given mobile Web site.

To be clear, this digital fingerprint is an anonymous ID based on key factors such as country -- to avoid spamming Chinese consumers with English-language content or advertising -- and handset type -- to avoid the bad user experience that happens when rich-media clips are sent to low-end handsets that can't play them.

Against this backdrop, the complaint -- that implies Bango's data-gathering capability constitutes unfair and deceptive practices -- overlooks the fact that the Bango user ID does not contain individual personal details such as the mobile phone number or current location. This cannot happen without the express approval of the individual who opts in to provide it.

Likewise, AdMob's ability to gather and mine data, thus enabling the delivery of targeted advertising, does not permit marketers to make the connection between the information and the individual.

But the issue is not about what technology can or cannot do, although it is important to set the record straight. It's about increasing consumer confidence in how their data is gathered and used.

If people know the benefits, there is a good chance they will provide the data to make a perfect match between their needs and the brand's message.

A recent Harris Interactive survey of 1,200 mobile subscribers worldwide shows that a whopping 78 percent of respondents were happy to receive relevant advertising tailored to their individual interests.

Additionally, 64 percent said they were willing to provide personal details to improve the relevancy of brand advertising they received on their mobile phones.

Targeting benefit, not advertising
Read between the lines, and the problem is not the ability of technology to target advertising. It's the ability of companies to communicate the potential benefit.

Munich-based Gofresh, which operates the ad-funded mobile social network, provides the industry a valuable blueprint to follow.

The company's global offer puts people in control of the advertising they receive on their mobile phones by allowing members to opt-in -- thus providing data on their personal preferences and interests -- and choose from 15 advertising channels, such as fashion, sports, entertainment and education, that they would like to receive.

Blyk, the world's first ad-funded mobile virtual network operator, has built its bottom line on empowering youth to get the marketing messages they find genuinely useful based on their personal interests, which they identify in an online questionnaire.

By way of background, the Finland-based company -- which has announced plans to launch in the Netherlands, Belgium, Germany and Spain -- broke on the scene in Britain in 2007. It offered 16- to 24-year-olds free text messages and call minutes in return for accepting up to six advertising messages per day.

To date, some 200 advertisers, including major brands such as Coca-Cola, L'Oreal and ckIN2U, a perfume created by Coty, have delivered targeted advertising messages via Blyk, reporting response rates exceeding 25 percent.

As Leif FÃ¥gelstedt, chief operating officer of Blyk, said, "The industry is starting to realize that mobile advertising equates to engaging people."

Indeed, advertising is both a communication tool and a form of content.

Author and independent analyst Alan Moore said, "People need brands, and brands need people." But there's one important aspect of this relationship Mr. Moore doesn't mention: People also need to have control of their advertising.

Citizen can
This is a guiding principle of Every Single One Of Us, a venture founded by Jonathan MacDonald, previously a chairman of the Music Industries Association, commercial director of Ministry of Sound and sales director at Blyk.

The firm seeks to unite a cross-section of wireless carriers, mobile companies and big-name brands to "aggregate knowledge, and authorize best practice and methodologies that ensure optimal mobile advertising experience."

The organization counts more than 100 supporters -- aptly called collaborators -- including the CEOs of large brands and advertising agencies, mobile influencers and citizen activists. (Disclosure: I am also a collaborator.)

More specifically, the venture -- often referred to as a movement -- calls on companies in the ecosystem to deliver mobile advertising in accordance with what Mr. MacDonald terms the 3Ps.

The 3Ps are: Permission -- people will decide what brand messages they interact with; privacy -- people will decide where there data is collected and how it is used; and preference -- people will decide what content they find relevant.

To this end, Every Single One Of Us is also creating a Citizen Authority, enabling "groups of willing citizens to have the ability to 'rubber stamp' campaigns, companies, and courses," thus enabling the rest of the world to have confidence and build trust in citizen-authorized activity such as advertising.

The privacy concerns that prompted the advocacy groups in the United States to file their complaint are the same ones that have driven the creation of Every Single One Of Us.

But there's a difference: Every Single One Of Us is committed to education, not regulation.

While eager to be involved in productive regulatory discussions, Every Single One Of Us is, as Mr. MacDonald puts it, "dedicated more toward education than regulation that potentially undermines the principles and values of citizens, and is supportive of methodologies that promote citizen bias."

Mobile, unlike the PC Internet, enables individuals to co-create their mobile advertising experiences, dictating the terms on which they will accept marketing messages and the grounds on which they will reject it as spam.

It's not about establishing new rules -- it's about encouraging best practice in advertising and marketing, helping individuals make informed decisions, and empowering people to take their rightful place at the start of the value chain, rather than at the end.

Peggy Anne Salz is chief analyst and publisher of MSearchGroove, a Cologne, Germany-based online source of analysis and commentary on mobile search, mobile advertising and social media. Reach her at