WhenU’s Win: How Will Buyers React?

When I wrote about the subject a few months ago, the onslaught of mail I received from industry professionals arguing against this form of marketing was truly staggering.

The majority focused on business ethics. Respondents pointed to the fact publishers have no control over contextual ads that pop up on their sites. They’re often not even aware the ads are there (companies in the contextual advertising field can deliver ads virtually wherever they please — even on competitors’ sites — if Internet users have installed their software).

Many made it clear they believed this technology should be made “illegal,” likening it to plundering and poaching. They asserted it robs publishers of their rights to accept (or reject) the ads that appear on their Web properties. They also went on to pan and berate all the companies involved in this business, including media buyers who use the products.

Just over two weeks ago, a judge in the U.S. District Court of Virginia ruled in favor of When U in a case against U-Haul International. The moving company had charged the contextual advertising seller (aka “adware” vendor) with copyright and trademark infringements. Like the marketers who wrote in, U-Haul objected to the fact some of its current and potential customers were being shown ads from its competitors while on the U-Haul site. The company maintained WhenU had no legal right to serve ads over its content. The judge disagreed.

What argument justified his decision? According to the report that summarized his ruling, he pointed to the role the Internet user plays in this advertising triangle, placing responsibility on the surfer. “The fact is that the computer user consented to this detour when the user downloaded WhenU’s computer software,” he said, “…this act is not trademark or copyright infringement, or unfair competition.”

This is the first time a judge has designated contextual advertising as legal, though there are still cases pending against WhenU and competing company Gator Corporation.

Naturally, this development won’t be viewed positively by site publishers, particularly those who have lost customers and sales to competitors that employ adware technology. For now, these souls are stuck between a rock and a hard place, left to plead their case in an unfavorable environment, or forced to fight fire with fire and advertise via this method themselves.

What of the online marketers who made their positions clear so many months ago? Will this ruling cause them to amend their beliefs? Does it supply the motivation some formerly reluctant advertisers need to give this type of advertising a chance?

According to Robert Kadar, WhenU’s executive director of sales, the ruling is having a positive effect on advertisers so far, at least those he’s encountered. “Over the last couple of weeks, a number of branded Fortune 500 (companies) have approached us for the first time, in the automotive, packaged goods, consumer electronics and pharmaceutical industries,” Kadar said.

He believes the news of the ruling will “absolutely” help bolster hesitant advertisers. For media buyers and advertisers who come from a traditional advertising background, and who have observed from afar the negative effect some of the more “experimental” forms of Internet advertising can have on some campaigns, the safest route is often the most appealing. This win could alleviate some of their fears, as could the news that big brand advertisers are surrendering their misgivings as well.

Still, those who oppose this form of advertising — often the very same buyers who unequivocally traduce pop-ups, email marketing in the age of spam, and other forms of advertising deemed contentious — aren’t likely to be swayed. I’d venture to say the only thing that could alter this group’s opinion is a combination of mutual understanding and cooperation between publishers and adware suppliers, plus cold, hard, and above all, unbiased data illustrating the value of these placements. To my knowledge, neither exists at present.

The next few months are certain to reveal more about just how media buyers will react to this win. In the meantime, let me know which side of the contextual advertising fence you’re on; your views on this ruling; and your predictions for the future of this tumultuous industry.

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