New York Times to Revamp E-mail Ad Policy

The New York Times Co.’s online unit is rethinking its policy governing email advertising, following a debacle earlier this month that may have had recipients believing that NYTimes.com had recommended two little-known stocks.

On Nov. 14 and Nov. 16, New York Times Digital distributed email ads that featured stock reports from “StockTopics.com,” a Web site that ostensibly appears to be a financial news page, but is owned and operated by a Web marketer, Internet Marketing Solutions, Inc.

The emails touted two little-known firms — mobile phone sales firm UniverCell Holdings and manufacturing company Liquidix. The subject lines of the pieces read, in part: “From NYTimes.com, A Special Investment Report from StockTopics.com. Aggressive Growth! Strong Buy Recommendation!,” and claimed that investors in each firm had seen greater than 50 percent returns on their investments during the past six months. Both companies’ stock prices jumped in the days immediately following the announcement.

Yet both companies trade on the National Association of Securities Dealers’ OTC Bulletin Board, and as such, they are exempt from the listing requirements faced by companies that are on, say, the Nasdaq. As a result, each had only limited requirements concerning disclosure of their tumultuous operating histories.

Liquidix, for one, had previously been known as Learner’s World, and operated daycare centers. In September, the company undertook a 200-for-1 reverse stock split, purchased Advanced Fluid Systems, a manufacturer of shock absorbers and liquid seals, and changed its name.

The firm also revealed in SEC filings that it has $1.3 million in taxes and debt — more than the company’s combined assets and liabilities, and said it plans to pay off its debts by selling its daycare business and by selling more stock.

UniverCell, which sells and rents mobile phones, had formerly been known as HyperMedia Communications. The firm started in 1989 as a print publisher but quit its offline business in 1999 to concentrate on its Web site, NewMedia.com. Less than a year later, though, it exhausted its funding, laid off its staff, and sold its site to internet.com (internet.com changed its name to INT Media, and is the parent company of this publication).

In its most recent filing with the SEC, HyperMedia — now doing business as UniverCell — posted no revenue and said it had $6 million in general and administrative expenses. It also said it had no operations in 2001, and is seeking a reverse merger partner.

New York Times Digital spokesperson Christine Mohan said that the company’s advertising policy would see changes as a result of the emails, which were sent to about two million opt-in subscribers in total.

She said NYTimes.com and New York Times Digital executives would review any future email messages sent out on behalf of advertisers, “to ensure that the emails are appropriate and consistent with our advertising acceptability guidelines.”

Previously, the firm’s email products team and managers had overseen all content that made its way into advertiser-sponsored emails, Mohan added.

The company also said the future emails would more clearly indicate that they were advertisements, with explicit language to that effect in the subject, header and footers.

NYTimes.com wasn’t the only site to distribute the email from Internet Marketing Solutions’ “StockTopics.com” — CBS Marketwatch.com also distributed the ad earlier this week. The company on Tuesday ran a disclaimer and a link to a New York Times story covering the controversy.

This isn’t the first time that StockTopics has been the source of controversy, either. Last month, the firm ran a similar ad in other outlets that claimed that TSRG Corp. was in talks to purchase Mobility Solutions, Inc. — an allegation that Mobility executives denied in a statement.

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