Spyware Watchdog Singles out Vonage Ads

As its post-IPO stock price plummets, Vonage hasn’t gotten much good press lately. Now the VoIP firm is under fire for its online ad practices with the release of a report from spyware watchdog Ben Edelman, who thinks the big Web ad spender ought to be more diligent in monitoring how its ads are delivered.

Edelman’s report, “How Vonage Funds Spyware,” lists 12 examples in which the company’s ads were served up through alleged spyware with the help of companies including 24/7 RealMedia, aQuantive, Direct Revenue and Right Media. In addition to tracking Vonage pop-up ads served via alleged spyware, the independent researcher spotted adware-served Vonage banners placed where site publishers don’t actually run ads, as well as a banner ad that blocked another ad. Edelman made his observations during March, June and July.

According to TNS Media Intelligence, Vonage has been the top spending online advertiser since before January of this year, spending more than $31 million per month on Web advertising alone. Vonage’s own SEC filing states that in 2005 and Q1 of 2006 it plunked down over $331 million on marketing across TV, Web, print and radio.

Unlike other advertisers with smaller ad budgets, Edelman argued, Vonage has “less excuse for not getting it right.”

JupiterResearch Analyst Emily Riley agreed that Vonage should be paying attention to where and how their ads are served, especially when it comes to brand impact and public relations. “They don’t want to be known as the spyware advertiser,” she continued.

Vonage SVP of Corporate Communications Brooke Schulz said Edelman’s charges are overblown. “We believe Mr. Edelman’s claims that this is a significant problem with our advertising are unfounded,” she told ClickZ. “Vonage takes this issue seriously and is committed to having good policing policies in place to prevent our brand from being sullied by unscrupulous spyware operators.”

Edelman’s report indicates that Vonage pop-up ads were delivered through a Searchingbooth application while visiting the Web site for VoIP competitor Skype. Another was served through alleged spyware outfit Direct Revenue while he was visiting Buy.com. Others were served to what Edelman calls “banner farms,” or ad-laden sites that derive traffic through alleged spyware applications. One, for instance, was served via a Look2me application to Hula Direct’s Global-Store.net, which Edelman has deemed one such banner farm.

Vonage has severed its relationships with Hula Direct and Direct Revenue, according to Schulz. She noted, “Vonage has investigated every case of spyware that has been brought to its attention and terminated the relationship immediately with the entities in question who we find are in fact using spyware.”

Edelman’s claims of seeing ads blocking other ads or placed in spots not offered as ad space by the publisher exemplify perhaps the most egregious practice described in the report. Just this Sunday, Edelman encountered a Vonage banner ad delivered on Boston.com through DollarRevenue that was placed directly over one for the Kellogg School of Management. Another banner was served by a Fullcontext application at the top of Google’s main search page, a place where the search site doesn’t offer advertising.

The Vonage ads Edelman describes in the report were trafficked through a series of steps from Vonage to the final ad-serving spyware. Right Media’s Yield Manager, DoubleClick’s Falk eSolutions AG and Traffic Marketplace are among those the report claims played roles in serving the Vonage ads.

Chains of intermediaries are common when advertising is served through ad networks. Many of the telecom company’s ads are indeed served through ad networks, according to Vonage’s Shulz; using networks is often more cost-efficient for direct response advertisers than buying ads directly through publishers. The downside is it can be difficult to keep track of where traffic is coming from when ads are delivered through ad networks.

The report shows the Vonage ads being tracked by aQuantive’s Atlas ad server. The ad management firm declined to comment specifically about Vonage; although spokesperson Ann Woolman referred ClickZ News to the company’s privacy policy, which states, “Atlas technology may not be used in connection with any downloadable application that is downloaded without notice and consent, or which collects personal information from the user without notice and consent.”

Edelman also made mention of this policy in his report, accusing the company of failing to enforce it.

“We believe this is a larger industry issue,” Woolman said, noting that aQuantive is a founding member of the Network Advertising Initiative, an organization formed to address privacy and consumer protection issues associated with emerging media.

In the end, opined Jupiter’s Riley, advertisers whose ads are served through spyware will make concerted efforts to put an end to such ad practices only when measurement shows them to be ineffective. “What it will come down to is measuring quality based on each source,” she commented.

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