HOW TO BE A SUCCESSFUL INTERNET ADVERTISERAND NOT GO STRAIGHT TO HELLE - PDF document

HOW TO BE A SUCCESSFUL INTERNET ADVERTISERAND NOT GO STRAIGHT TO HELLEric S. LevyGardere Wynne Sewell LLP1601 Elm Street, Suite 3000Dallas, Texas 75201214-999-3000 Helping Clients with E-Commerce and the Internet 2001Houston – March 29-30, 2001Dallas – April 5-6, 2001Chapter 5 How to be A Successful Internet Advertisement Chapter 5 1 IntroductionMore and more people are going on-line everyday. As of December, 2000, it was estimated thatapproximately 192 million English speakers and211 million non-English speakers were on-line insome form or fashion.1 Even with the collapse ofthe so-called “dotcom” industry, the lure andpower of the Internet has not gone away. As morepeople become familiar and comfortable with thisnew media, the concept of buying things overInternet becomes increasingly attractive. It’sfaster, easier and in many instances cheaper thanbuying at a traditional store. Additionally, almosteverything that you could possibly think of to buycan be found somewhere on-line. There arewebsites that cater to virtually every human need,whether it is waffle irons, polo mallets or hardcorepornography.And there isn’t just one website that sells whatyou are looking for, but many. Should you buyyour books at amazon.com orbarnesandnoble.com? Who has the best selectionof waffle irons at the best prices? If you are an on-line seller of consumer products, you need to makesure that questions like these get answered with avisit to your website. That’s where advertisingcomes in. According to the Internet division ofCompetitive Media Reporting, revenues from on-line advertising reached approximately $2.9 billionin 2000.2 While this is not as dramatic anincrease as in 1998 and 1999, it is an increasenonetheless.This article will discuss some of the varioustypes of Internet advertising which are available,as well as some of the typical issues that arisewhen negotiating a contract for advertising. It willthen move on to compliance issues: making surethat the advertising you do does not get you introuble with either the public or the government.II. The Transactional Side of InternetAdvertising General Forms of Internet Advertising1. Websites. The most obvious form of advertising on the Internet is the website. This caneither be a site that you design or one that you hiresomeone to design for you. Depending upon theaudience you wish to reach, websites can cost Statistics from the Global Reach website,www.glreach.com. See www.cmr.comanywhere from $2,000 to several hundreds ofthousands of dollars to create and maintain. Theaverage national advertiser spends $228,000developing a website and $150,000 maintainingthe site.What goes into the actual design and layout ofa website is beyond the scope of this article. Froma legal standpoint, however, there are two thingsthat you need to remember: 1) all representationsand disclaimers on your website need to complywith the advertising regulations promulgated bythe Federal Trade Commission (discussed in moredetail below) and 2) if you have someone elsedesign your website, make sure that your contractwith the website designer specifies that the designis a “work for hire” so that you retain allintellectual property rights in the layout andcontent of the site. Other compliance issues arediscussed later in this article.2. E-mail. This form of on-line advertising is akin to the mass mailings of old and is by far thecheapest way to advertise on the Internet. Whilethis type of advertising has been given the ratherderogatory term of “SPAM” (discussed in moredetail below), it definitely still has its place on theInternet, particularly when it comes to notifyingyour existing customers of new products andservices in which they might be interested.3. Banner Ads. Many websites sell advertising space in the form of banner ads, whichare the on-line equivalent of a billboard, with theadded bonus that they can be animated or includeaudio or video. A banner ad may appear to allusers, or may be dependent upon the top-leveldomain of the user (e.g., .gov, .edu, .org), thebrowser type, the operating system or on-linebehavior. Some sites actually track where visitorscome from and go to, so they can more accuratelydetermine their potential commercial interests.The banner ads they ultimately see may thenbecome specifically tailored to reflect thoseinterests. A more detailed discussion of howbanner ads generate revenue is provided below.Akin to banner advertising is websitesponsorship. These sponsorships are usually tiedto the content of the particular site. Thus, forexample, a website offering travel information onvarious destinations may be sponsored by a travelagency or a travel services company, such asAmerican Express. The sponsorship would beprominently displayed on the page, and thesponsor would be given prime positions in thewebsite for its banner ads. How to be A Successful Internet Advertisement Chapter 5 2 Search Engines. These are the on-line equivalent of the Yellow Pages, albeit a muchmore complex and comprehensive Yellow Pagesthan the five-pound book that shows up on yourdoorstep twice a year. A person looking to find aparticular product, say pillowcases, would simplytype the name “pillowcase” into the search engine.The search engine then looks through the metatag(see below) of each site for the word “pillowcase”and creates a list of all of the websites that havethe word. The list of sites might include storesthat sell pillowcases on-line, instruction pages onhow to sew your own pillowcases or fan pagesdedicated to educating the world on the importantrole that pillowcases have played in world politicsthroughout the centuries.Search engines make their money in a varietyof ways. One way is by selling the right to belisted on the website for a flat fee, usually paidannually. This is just like buying a listing in theYellow Pages. Another way that search enginesmake money is by selling banner ads (describedabove). In particular, they often sell advertisersthe right to a “keyword” so that, for example, aperson searching for “sleep” or “rest” will see abanner for “Chuck’s House of Pillowcases” (youget the idea).B. On-line Advertising Models3Within the various general forms ofadvertising described above are various“techniques” or “approaches” that utilize thosegeneral forms in a more specific fashion. Some ofthese approaches require the assistance of anagency that specializes in on-line advertising orthat provides software that can assist you inmaximizing your return. Some of these modelshave “died out” in recent years and some aremerely on-line versions of already existingadvertising models, but all are still available.1. On-Line Profiling. Many advertising/marketing companies are providingtheir customers with not only a means of gettingtheir advertising onto the Internet, but insuring thatthe right people see that advertising. Sellingkeywords (see above) is just one example.Adfinity offers software that enables advertisers toaccess customer profile data already present in Most of the models described in this section werepulled from Delta and Matsuura’s LAW OF THEI (Aspen Law & Business, 1996)existing direct marketing databases.4 This accessenables the advertisers to target their ads moreefficiently, based on the already availableconsumer data. DoubleClick has software thathelps on-line advertisers locate their ad banners onWeb sites where they are most likely to be seen bybrowsers. The software, known as ClickBoosters,selects locations for ad banners based on thepopularity of Web sites and particular pages, andby the viewing patterns of new visitors to sites.5As one might expect, on-line profiling raisesserious privacy concerns. The more data beingsurreptitiously gathered on-line by advertising anddirect marketing agencies, the more outraged thegeneral public becomes when it finds out. TheFederal Trade Commission’s investigation ofDoubleClick’s data collection policies last year isa perfect example (see discussion of privacybelow). Staying at Home. Another frequent complaint about banner advertising is that it tookviewers away from the site they were originallyviewing. This was good for the banner advertiser,but bad for the organization sponsoring thewebsite. In 1997, First Virtual Holdings developedsoftware that enabled customers clicking on anadvertising banner at a Web site to requestinformation and conduct transactions within thebanner without leaving the Web site in which thebanner is located.6 Use of the First Virtualsoftware enables the customer to interact with theadvertising party yet remain at the site he or sheoriginally chose to visit. This approach enablesthe host site to derive greater benefit bylengthening the customer’s visit to its site, thusincreasing the number of site pages viewed byeach visitor.Akin to the software developed by FirstVirtual is the “frames” feature available as part ofNetscape’s Communicator browser software. Theframes feature involves use of a commandembedded in Web sites which instructs browsersoftware to split the viewer’s screen image into Thomas E. Weber, Software Lets Marketers TargetWeb Ads, ALL STREET J, April 21, 1997 at p.B1. Thomas E. Weber, Ad-Placement Software HelpsFind the Web’s Hot Spots, ALL STREET JOctober 23, 1996 at p. B5.6 First Virtual Offers Direct-Response Ad Banners, (a supplement to THE RED H), Winter 1997at p. 6. How to be A Successful Internet Advertisement Chapter 5 3multiple frames.7 By splitting the screen, a usercan view multiple Web pages at the same time.The split screen capability also enables the Website to leave its border image in place on theviewer’s screen even after the viewer clicks to adifferent Web page.8 This capability increases thechances that a Web surfer will return to theoriginal Web site, even after moving on to adifferent site, as the original site’s border willremain on the viewer’s screen and can includelinks back to the original site.Framing does raise certain compliance issues.By retaining the border from the original Web siteeven after the user has moved on to another site,the original site retains a presence in the viewer’sattention. To the extent that the original siteincluded advertising in its border, that advertisingwill remain on the border even after the viewermoved to another Web page, which in turn permitsthe original Web site to keep advertising in frontof the Web viewer for a longer period. Someconcerns have been raised that this capabilityeffectively enables the original site to preserve themisleading impression that the viewer is still atthat site even after he or she has actually moved toanother one.9 Others have noted that the use offraming by the first site visited may undermine theability of sites visited subsequently to have all oftheir advertising seen by the viewer.10 Web sitescan prevent other sites from framing their pages byinserting specific coding into their sites.11 Hooks. Hooks are ways to lure a person to a site, typically with some sort of promotion orgame. For example, several years ago, a companycalled SiteSpecific created banners containing on-line vignettes that asked viewers questions derivedfrom the Ripley’s Believe it or Not! material(“How long was the world’s longestcucumber?”). When visitors clicked on one ofthe possible answers identified at the site, theywere taken to the Duracell home page, whichprovided the correct answer along with othergames and information on Duracell products.13 Rebecca Quick, “Framing” Muddies Issue of ContentOwnershipALL STREET J, Jan. 30, 1997 at p.B8. Id. Id. Id. Id. Luc Hatlestad, Holy Warriors, HE RED HFebruary 1997 at p. 42.13 IdSiteSpecific charged only for sales “leads”generated by the advertising, which were definedas the number of individuals who actuallycomplete an on-line form at the company’s Website requesting additional product information.14 Acompany called Yoyodyne developed a variety ofe-mail-based games that anyone could play forfree. Prizes were awarded to the winners of thosegames, and those prizes were provided bysponsors who made them available in exchangefor the opportunity to market their products andservices to the Yoyodyne audience. The on-linegame mechanism was used by Yoyodyne as a wayto tie entertainment/information with advertising, aformula common in the on-line commerceenvironment.Another example of “hook” advertisinginvolves giving away money—large quantities ofmoney. An example of this is www.iwon.com, a website that gives away tens of thousands ofdollars every month to viewers who accessadvertising and other content through its website.Each time that a user clicks on a link on thewebsite, whether it is for shopping, news orentertainment information, he receives a selectnumber of entries in the next cash giveaway. Heeven gets entries for searching through the Iwonsearch engine. Because people believe that theyhave a better chance of winning the more linksthey click on, they will stay on the site muchlonger and may even investigate one or more ofthe links they click through in the process ofentering the next prize drawing.Although many advertising campaigns and/ormarketing programs on the Web are utilizinggames and contests to drive traffic to Web sitesand/or introduce products and services, suchpromotions are subject to considerable regulation.Accordingly, before implementing such apromotion, readers are advised to conduct anappropriate level of legal due diligenceconsidering applicable law. For example, does thejurisdiction have any registration requirements?What legal issues can be addressed in thepublished “rules” for the contest, and can suchrules be changed once the promotion has started?Must an offline method of entering the contest beprovided to get around the general “charge” foron-line access? Can minors participate? Giventhe ubiquity of the Internet, is the on-linepromotion impacted by state gambling statutes? Id How to be A Successful Internet Advertisement Chapter 5 4Another example of “hook” advertising ispaying viewers to read ads. This can take the formof direct or indirect compensation. For examplecompanies like CyberGold and GoldMail directlycompensate users by paying them to complete avery thorough questionnaire regarding theirpersonal preferences on a wide variety of topicsand then view advertising on the Web specificallytargeted to those preferences. The programs aresimilar to airline “frequent flyer” programs in thatthey usually pay a certain number of “points” foreach ad viewed, said points being redeemable forvarious products offered by the service.15Conversely, companies like Juno On-lineServices offer users free e-mail and/or Internetaccess in exchange for the right to run screenadvertisements for viewers while they read andwrite their electronic messages using the Junosoftware and service. Juno obtains generalprofiles of its users, but it does not track thespecific identity of each user. Advertisers payJuno for the right to send their advertising directlyto users with a particular general profile. In thisway, the advertisers are able to target their adsdirectly to specific types of individuals, and theusers get their e-mail service for free. By 1997,Juno had become one of the largest and fastestgrowing e-mail services with more than onemillion subscribers and the addition ofapproximately 8,000 new subscribers each day.16However, the bloom is off the rose for thisparticular advertising model, as advertisers arebecoming more and more reluctant to pay for adsthat nobody appears to be reading. Additionally,companies like Juno are finding out that the offerof “unlimited” access is being exploited not just byhome Internet users, but by companies that thinkthey can run their entire on-line businessoperations through Juno’s free service. This inturn puts a strain on their ability to provide theservice from a technical (server overload), andtherefore a financial standpoint [CITE]. Many aremoving to a service that is free for a certainnumber of hours per month and then costs anhourly rate after that. See Bart Ziegler, Are Advertisers Ready to PayViewersALL STREET J, Nov. 14, 1996 at p.B1; Doug Henschen, On-line “Gold” Rush TargetsConsumers, Rewards Response, DM NEWS, Aug. 5,1996 at p. 23.16 One Million Sign Up for Juno’s Free E-Mail Service,DM NEWS, Jan. 13, 1997 at p. 17.4. “Push” Distribution. “Push” distribution or delivery, or “Webcasting,” relies on the Internetto push or broadcast commercial information toviewers instead of adopting the traditional “pull”model which depended on the users’ attraction tothe Internet to search out on-line material.17 Usinga push distribution model, commercial advertisingwould be distributed to targeted Internet users.For example, with the advent of high speed,“always on” Internet connections, severalcompanies offer what could be called “continuousinformation services” that act as the equivalent ofa screen saver for your computer. These servicesprovide continuous updates on informationselected by the particular user, such as the pricesof stocks that she has an interest in or breakingnews on her favorite sports franchise. The servicemay or may not be free, but it would assuredlyinclude commercial advertising in the material itdistributes in much the same way as massdistribution television.Another type of “push” distribution is thecustomizable home page. The home page is theone that comes up when you first open your webbrowser after logging on to the Internet. It can beadjusted manually by you in the “Preferences” or“Options” portion of your browser menu. Unless,a person has designed her own home page, theaverage Internet user will designate one of thesearch engines as the home page, since that makesit easier to initiate an on-line search. Many of themajor search engines, such as Excite, Yahoo! andInfoseek, offer users a way to customize theirdefault web page to make it unique to them andtheir specific interests. When customers registerfor the default web page service, various types ofpersonal information are collected from them,such as basic technical information (e-mailaddress, etc.) and information about theindividual’s personal tastes (music preferences,stocks/mutual funds of interest, favorite sportsteams, etc.) Based on this information, the searchengines construct customized default pagescontaining the information of interest to each user,given his identified preferences.5. Chat Rooms. Another advertising approach that is being used on the Web is thesubsidizing of user access to on-line chat rooms.Chat rooms provide on-line forums in whichindividuals can communicate in real time with Hunter Madsen, Reclaiming the Deadzone, WIRED,December 1996 at p. 216. How to be A Successful Internet Advertisement Chapter 5 5others visiting the same room. Chat rooms aregenerally organized around a common theme orinterest. Often, sponsors of chat rooms will invitespecial guests (authors, actors or musicians) tospeak to fans in the chat rooms at a specified time.Users are sometimes charged an access fee toparticipate in chat room activities, but severalyears ago, Live World Productions developed anapproach through which users would not becharged access fees to use the LiveWorld chatrooms (“Talk City”).18 Instead, LiveWorldderived revenue from fees to be charged toadvertisers for the right to place advertising in theTalk City chat rooms. Some observers believethat advertising in chat rooms will have a greaterimpact than advertising on Web sites becausevisitors tend to spend more time in chat roomsthan they do at any single Web site. Also, themore leisurely pace associated with chat roomvisits may give users more of an opportunity toreview advertising at those sites.6. Indirect Marketing. On-line advertising has also begun to apply some indirect marketingstrategies that take advantage of the Internet’sability to create communities of interest. As partof its marketing campaign in support of the soonto be released movie The Lord of The Rings, NewLine Cinema created a Lord of the Rings Web siteapproximately two to three years before the movieis set to be released. The site is attempting toattract a community of visitors who the producersbelieve will be attracted to the film once released.It offers continuous information on the status ofthe film (who’s playing which characters, what’sbeing shot) as well as clips of interviews with castmembers and production staff, all in an effort tobroaden the potential audience beyond those whoare already fans of Tolkien’s works.7. Multimedia. Finally, the creation and use of multimedia promotional events is becoming adeveloping trend in on-line advertising. Oneexample of this form of Internet advertising wasthe Victoria’s Secret fashion show that becameone of the most widely viewed advertising eventsin the history of the Internet to date. The companyinvested heavily in its Web site and on-linepresence and actively promoted the on-line event,making use of streaming video technology for theshow. It is estimated that approximately 1.5 Joan Indiana Rigdon, Lots of Cheap Talk at “ChatRooms” Draws Venture Cash for New Firm, TREET J, Dec. 6, 1996 at p. B5.million viewers participated in the event.19Demand was reportedly so great that the serversinvolved could not handle the traffic, andapproximately five percent of the viewers whotried to participate could not access the server. Itis likely that many other businesses will make useof on-line multimedia events to promote theirproducts and services in the near future,particularly as streaming technology becomesmore able to deliver a high quality viewingexperience, and this form of on-line advertisingwill become significantly more prominent.C. Business Issues Surrounding On-LineAdvertising Compensation. Perhaps the biggest issue on the transactional side of Internet advertising iscompensation. If the advertisement is to bedisplayed in static display or random rotationdisplay (see below), what is the minimum numberof impressions the Host Provider will provide?And how is “impression” defined for theAgreement? Is an impression counted every timethe Web page containing the Advertisement isloaded in front of a visitor to the Host Site,whether or not the visitor waits long enough forthe whole page to load? Or must the visitor waitfor the whole page to load for an impression to becounted? What is the Advertising Fee? Amonthly fee, a fee based on the number of monthlyimpressions (usually stated as a cost-per-thousandimpressions or CPM) or a fee based on “clicks”(see below)?Some compensation structures are built arounda fee for the number of times an ad is requested(and presumably seen) by a Web site visitor.These are known as “ad views.” The problemwith ad views is caching. Let’s say that a uservisits four Web pages during an on-line sessionand wants to return to the first Web page visited.All he or she would have to do is click the “back”button of his or her browser until the first Webpage is displayed. This second display of the firstWeb page would be the Web page as “cached” onthe user’s computer or on the ISP’s servers ratherthan the Web page as then stored on the Web siteoperator’s servers (assuming the Web page hasbeen changed since the first viewing). When thishappens, the user is probably viewing anadvertisement for the second time without theWeb site operator receiving credit for this second Victoria’s Secret Shows Lingerie Pulls on the Web,ALL STREET J, Feb. 5, 1999 at p. B2. How to be A Successful Internet Advertisement Chapter 5 6“ad view” because access to the cached Web siteis not captured by the counting mechanism in theWeb site operator’s servers.“Click-throughs” are more common than “adviews” as a measure of advertising effectivenessand fee calculations. “Click-throughs” generallyrepresent the number of times users click on anadvertisement, which either takes them to theadvertiser’s Web site or other more specificcontent provided by the advertiser. Caching is aproblem with this form of compensation too. Inthe above example, if the user clicks through to theadvertiser’s Web site from his or her secondviewing of the advertisement, the Web siteoperator’s servers may not capture the click-through. Conversely, a “click” does notnecessarily mean that the user arrives at thedestination site selected by the advertiser, but onlythat he was “transferred” to the destination site.Even more problematic for advertisers iscompensation based upon “page views.” “Pageviews,” which are favored by Web site operatorsbecause they are more easily tracked, represent thenumber of times that a Web page containing aspecific advertisement is requested by users. Onceagain, caching can understate the number of timesthat a particular advertisement is actually seen. Itcan also understate the number of actual views ifthe user has turned off her graphics (often done tospeed browsing), or the advertisement does notappear “above the fold” (i.e.--on the first screenshot of a multi-screen page and therefore viewablewithout the visitor having to “scroll down” to seethe advertisement).All of the above measurements are “sitecentric” measurements because they track trafficbased upon an analysis of server logs for therelevant Web site. Another site-centric term,which is as vague as any of the others, is the term“impression.” “Impressions” represent the numberof times an advertisement is “called up” from theadvertiser’s server, and are generally sold by the“CPM” or cost per thousand impressions (i.e., theprice for delivering one thousand impressions at aparticular Web site). Similar to the situation with“clicks,” an ad having been “called up” does notnecessarily imply that the ad has been fully loadedonto the user’s computer. Accordingly, twodistinctly different positions are created: a Website operator will prefer to define an impression asan ad being “called up,” while an advertiser willprefer that an impression be counted when the adhas been fully loaded onto the user’s computer.Even if impressions or ad views are the agreedmeasure for compensation, the advertiser shouldalso consider tracking the “click-through rate” todetermine advertising effectiveness; namely, thenumber of click-throughs as compared to the totalnumber of impressions served. Although a lowclick-through rate may not be attributable to theWeb site operator (e.g., it may relate to theparticular advertisement served), the low rate mayindicate that the site is not giving the advertiserenough click-throughs for the price. For example,the low click-through rate may be indicative offlaws in the demographics presented by the Website operator describing the population of usersvisiting the site. In such case, a mechanism foradjusting the compensation structure (or the adplacements themselves) may be appropriate.Finally, some host companies are now offeringtheir customers result-based rates, such as cost-per-sale or cost-per-action. For cost-per-sale, thehost site would use Web ad management tools tomonitor which host site visitors click on the ad andthen buy the products advertised in the customer’sadvertised site. The host provider’s fee would be apercentage of the resulting sales revenue. If thereare no sales, the ad is free. For “cost-per-action,”the host site would get paid only for the number ofhost site users who take some specified action,such as filling out an electronic survey orrequesting product information or samples.2. Display Type. There are, generally speaking, four ways that an ad can be displayed ona host site:a. Static Display – This form displaysthe ad or link on the Host site without anyrotation; Random Rotation Display – This formdisplays the ad or link on the Host Sitewith constant rotation to differentlocations on the Host Site;c. Targeted Result Display – This formdisplays the ad or link on a Results Pagesin response to Host Site visitor searcheson specified Keywords;d. Targeted Page Display – This formdisplays the ad or link on specified pagesof the Host Site, such as the menu page ora page targeted to a particular marketsegment.There are other possible arrangements, such asrotation of several Customer ads through the same How to be A Successful Internet Advertisement Chapter 5 7“banner.” Whichever one is ultimately chosen, itis important to have the appropriate language inthe advertising agreement.3. Warranties. What warranties will be given by the host provider? Typically, the hostprovider will warrant that it will make areasonable effort to perform its services in acompetent manner, but it may wish to limit itsliability for any error in performance, perhaps tothe amount of the advertising fees paid by thecustomer in the 12 months preceding the eventgiving rise to the claim of liability.What warranties will be given by thecustomer? Typically, the customer warrants thatthe advertisement is truthful and will not violateany laws or regulations; that it will not infringe ormisappropriate any third-party intellectualproperty rights or privacy/publicity rights; and thatit does not contain any material that is unlawful,harmful, abusive, hateful, obscene, threatening, ordefamatory. Because displaying an unlawful ad orone that violates third-party rights could exposethe host provider to liability, a provision obligatingthe customer to indemnify the host provider isusually included.4. Reporting. What information will be included in the monthly reports to the customer?This information is designed to help the customermeasure the effectiveness of the ad. Theinformation could include daily and monthlyimpressions, page views, clicks, and click-rates.The host provider should be obligated to use acommercially reasonable (or agreed upon) meansof obtaining this information. In addition, the hostprovider should take appropriate steps to ensurethat the use of such information does not violateany rules relating to consumer privacy.III. The Compliance Side of InternetAdvertising Disclosure RequirementsThe Federal Trade Commission (“FTC”) hasmade it abundantly clear that the same federalconsumer protection laws that apply tocommercial activities in other media apply on-line.The FTC’s prohibition against “unfair or deceptiveacts or practices” encompasses Internetadvertising, marketing and sales. In addition,many FTC rules and guides are not limited to anyparticular medium used to disseminate claims oradvertising, and therefore, apply to on-lineactivities.It is also safe to say that FTC rules and guidesthat use the words “written,” “writing” and“printed” will apply on line. For example:1. Rules and guides that apply to written adsor printed materials also apply to visual textdisplayed on the Internet.2. If a seller uses email to comply with theFTC rule or guide notice requirements, the sellershould ensure that consumers understand that theywill receive such information by email andprovide it in a form that consumers can retain.3. “Direct mail” solicitations include email.If an email invites consumers to call the sender topurchase goods or services, that telephone call andsubsequent sale must comply with theTelemarketing Sales Rule requirements.In order to avoid claims of unfair, deceptive orfalse advertising and to ensure that consumersreceive material information about the terms of atransaction, the FTC has published what it refersto as the “Dotcom Disclosures,” a set of ratherdetailed guidelines for making sure that alladvertising disclosures are “clear andconspicuous.”In evaluating whether disclosures are likely tobe clear and conspicuous in on-line ads,advertisers should consider the placement of thedisclosure in an ad and its proximity to the relevantclaim. Additional considerations include: theprominence of the disclosure; whether items inother parts of the ad district attention from thedisclosure; whether the ad is so lengthy that thedisclosure needs to be repeated; whetherdisclosures in audio messages are presented in anadequate volume and cadence and visualdisclosures appear for a sufficient duration; andwhether the language of the disclosure isunderstandable to the intended audience.1. Placement and Proximity. A disclosure is more effective if it is placed near the claim itqualifies or other relevant information. Proximityincreases the likelihood that consumers will seethe disclosure and relate it to the relevant claim orproduct. On a Web page, the disclosure is morelikely to be effective if consumers view the claimand disclosure together on the same screen. SeeFTC Example 1 athttp://www.ftc.gov/bcp/conline/pubs/dotcom/moc If scrolling is necessary, advertisers should askwhether consumers are likely to do it. If How to be A Successful Internet Advertisement Chapter 5 8consumers don’t scroll, they may miss importantqualifying information and be misled. In thesecircumstances, advertisers are advised to:a. Use text or visual cues to encourageconsumers to scroll. Text prompts canindicate that more information isavailable. An explicit instruction like “seebelow for important information ondiamond weights” will alert consumers toscroll and look for the information. Thetext prompt should be tied to thedisclosure that it refers to. General orvague statements, such as “see below fordetails,” provide no indication about thesubject matter or importance of theinformation that consumers will find andare not adequate cues. The visual designof the page also could help alertconsumers to the availability of moreinformation. For example, text thatclearly continues below the screen,whether spread over the entire page or in acolumn, would indicate that the readerneeds to scroll for additional information.See FTC Example 2 athttp://www.ftc.gov/bcp/conline/pub/buspu A scroll bar on the side of a computer screen is not asufficiently effective visual cue.b. Avoid Web page formats thatdiscourage scrolling. The design of somepages might indicate that there is no moreinformation on the page and no need tocontinue scrolling. If the text ends beforethe bottom of the screen or readers seeseveral inches of blank space, chances arethey will stop scrolling and miss thedisclosure. See FTC Example 3 athttp://www.ftc.gov/bcp/conline/pubs/busp . In addition, if there is a lot of unrelated information –either words or graphics – separating aclaim and a disclosure, even a consumerwho is prompted to scroll might miss thedisclosure or not relate it to a distant claimthey’ve already read.With hyperlinks, additional information,including disclosures, might be placed on a Webpage entirely separate from the relevant claim.Disclosures that are an integral part of a claim orinseparable from it, however, should be placed onthe same page and immediately next to the claim.This is particularly true for cost information orcertain health and safety disclosures. See FTCExample 4 at . In other situations, it may not even be necessary to use a hyperlink to conveydisclosures. Often, disclosures consist of a wordor phrase that may be easily incorporated into thetext, along with the claim. See FTC Example 5 athttp://www.ftc.gov/bcp/conline/pubs/buspubs/dotc . Hyperlinked disclosures may be necessary if the disclosure is lengthy or ifit needs to be repeated (because of multipletriggers, for example). In evaluating theeffectiveness of a hyperlink for a particulardisclosure, consider the following:a. Make it obvious. Consumers shouldbe able to tell that they can click on ahyperlink to get more information.b. Label the link to convey theimportance, nature and relevance of theinformation it leads to. The label shouldmake clear that the link is related to aparticular advertising claim or product andindicate the nature of the information to befound by clicking on it. See FTC Example6 athttp://ftc.gov/bcp/conline/pubs/buspubs/do . The hyperlink label should use clear, understandabletext. Although the label itself does notneed to contain the complete disclosure, itmay be useful to incorporate part of thedisclosure to indicate the type andimportance of the information the linkleads to.c. Don’t be coy. Some text links mayprovide no indication about why a claim isqualified or the nature of the disclosure.In most cases, simply hyperlinking asingle word or phrase in the text of an admay not be effective. The same may betrue of hyperlinks that simply say“disclaimer,” “more information,”“details,” or “terms and conditions.” SeeFTC Example 9 athttp://ftc.gov/bcp/conline/pubs/buspubs/do and FTC Example 10 athttp://ftc.gov/bcp/conline/pubs/buspubs/do Don’t be subtle. Asterisks or othersymbols by themselves may not beeffective. Typically, they provide no clues How to be A Successful Internet Advertisement Chapter 5 9about why the claim is qualified or thenature of the disclosure. See FTC Example11 athttp://ftc.gov/bcp/conline/pubs/buspubs/do . In fact, consumers may view an asterisk oranother symbol as just another graphic onthe page. See FTC Example 12 athttp://ftc.gov/bcp/conline/pubs/buspubs/do Use hyperlink styles thatconsistently allow consumers to knowwhen a link is available. For example, ifhyperlinks are usually underlined in a site,chances are consumers wouldn’t recognizeitalicized text as being a link, and couldmiss the disclosure. The hyperlink shouldbe proximate to the claim that triggers thedisclosure so that consumers can notice iteasily and relate it to the claim. Typically,this means that the hyperlink is adjacent tothe triggering term or other relevantinformation. See FTC Example 13 athttp://ftc.gov/bcp/conline/pubs/buspubs/do Make getting to the disclosure onthe click-through page easy. The click-through page – that is, the page thehyperlink leads to – must contain thecomplete disclosure. The disclosure mustbe displayed prominently. Distractingvisual factors, extraneous information, andmany “click-away” opportunities to linkelsewhere before viewing the disclosurecan obscure an otherwise adequatedisclaimer. See FTC Example 15 athttp://ftc.gov/bcp/conline/pubs/buspubs/do . The hyperlink should take consumers directly to thedisclosure. They shouldn’t have to searcha click-through page or go to other pagesfor the information. See FTC Example 16at . Advertisers can monitor click-through rates – oftenconsumers click a hyperlink and view theclick-through page – for accurate data onthe efficacy of the hyperlink. Advertiserscan also evaluate the amount of timevisitors spend on a certain page, whichmay indicate whether consumers arereading the disclosure. If hyperlinks arenot followed, another method ofconveying the required information wouldbe necessary.In evaluating placement, it is also importantto remember technological limitations. Somebrowsers or information appliances may notsupport or display frames properly, so a disclosureplaced in one portion of the frame may not beviewable. Certain Internet tools may overcomethis limitation by determining if a consumer’sWeb browser can view frames and if not, serving apage that is formatted differently. Without suchtools, advertisers should be concerned aboutwhether a required disclosure will appear. If itwon’t, they should choose different ways tocommunicate the disclosure. Where advertisingand selling are combined on a Web site,disclosures should be provided before theconsumer makes the decision to buy, i.e.--beforeclicking on an “order now” button or a link thatsays “add to shopping cart.”2. Prominence The size, color, and graphics of the disclosure affect its prominence.a. Size. Disclosures that are at least aslarge as the advertising copy are morelikely to be effective.b. Color. A disclosure in a color thatcontrasts with the background emphasizesthe text of the disclosure and makes itmore noticeable. See FTC Example 22 athttp://ftc.gov/bcp/conline/pubs/buspubs/do . Information in a color that blends in with the backgroundof the ad is likely to be missed. See FTCExample 23 athttp://ftc.gov/bcp/conline/pubs/buspubs/do Graphics. Although using graphicsto display a disclosure is not required, theymay make the disclosure more prominent.The size of a disclosure should be comparedto the type size of the claim and other text on thepage. If a claim uses a particular color or graphictreatment, the disclosure can be formatted thesame way to help ensure that consumers who viewthe claim are able to view the disclosure as well.In addition, the graphic treatment of the disclosuremay be evaluated in relation to how graphics areused to convey other items in the ad.The prominence of the disclosure may also beaffected by other factors. A disclosure that is How to be A Successful Internet Advertisement Chapter 5 10buried in a long paragraph of unrelated text wouldnot be effective. The unrelated text detracts fromthe message and makes it unlikely that a consumerwould notice the disclosure or recognize itsimportance. Even though the unrelatedinformation may be useful, advertisers mustensure that the disclosure is communicatedeffectively. Flashing images or animated graphicsmay reduce the prominence of a disclosure. SeeFTC Example 24 athttp://ftc.gov/bcp/conline/pubs/buspubs/dotcom/m Repetition. It may be necessary to disclose important information more than once inan advertisement to convey a non-deceptivemessage. Repeating a disclosure makes it morelikely that a consumer will notice and understandit. Still, the disclosure need not be repeated sooften that consumers would ignore it and it cluttersthe ad. Advertisers should question whetherconsumers who see only a portion of their ad arelikely to miss a necessary disclosure and bemisled. If claims requiring some qualification arerepeated throughout an ad, it may be necessary torepeat the disclosure too.4. Audio and Video Disclosures. If a claim uses audio to convey its message, the disclosureshould use audio as well. The disclosure shouldbe in a volume and cadence sufficient for areasonable consumer to hear and understand it.The volume of the disclosure can be evaluated inrelation to the rest of the message, and inparticular, the claim. Of course, consumers whodo not have speakers, appropriate software, orappliances with audio capabilities will not hear theclaim or the disclosure. Because some consumersmay miss the audio portion of an ad, disclosurestriggered by a claim or other information in anad’s text should not be placed solely in an audioclip.Visual disclosures presented in video clips orother dynamic portions of on-line ads shouldappear for a duration sufficient for consumers tonotice, read and understand them. As with briefvideo superscripts in television ads, fleetingdisclosures on Web sites are not likely to beeffective. Understandability. To ensure that disclosures are effective, consumers must be ableto understand them. Advertisers should use clearlanguage and syntax and avoid legalese ortechnical jargon. Disclosures should be simpleand straightforward as possible. Incorporatingextraneous material into the disclosure also maydiminish the message that must be conveyed toconsumers.In reviewing their on-line ads, advertisersshould adopt the perspective of a reasonableconsumer. They also should assume thatconsumers don’t read an entire web site, just asthey don’t read every word on a printed page. Inaddition, it is important for advertisers to drawattention to the disclosure. Making the disclosureavailable somewhere in the ad so that consumerswho are looking for the information might find itdoesn’t meet the clear and conspicuous standard.Even though consumers have control over whatand how much information they view on Websites, they may not be looking for – or expecting tofind – disclosures. Advertisers are responsible forensuring that their messages are truthful and notdeceptive. Accordingly, disclosures must becommunicated effectively so that consumers arelikely to notice and understand them.B. False and Deceptive AdvertisingAs one might expect, deceptive advertising isprohibited by the FTC. An act or practice isconsidered “deceptive” when (1) it is arepresentation, omission, or practice (2) that islikely to mislead a consumer acting reasonablyunder the circumstances, and (3) therepresentation, omission or practice is material.The phrase “representation, omission or practice”includes both express and implied claims by anadvertiser. Extrinsic evidence may or may not berequired when an implied claim is alleged. If arepresentation is targeted towards a specificaudience that is unusually vulnerable, likely theelderly, children or the terminally ill, then the FTCwill adjust the “reasonable consumer” standard toreflect the expected level of reasonableness forthat group. If disclosures or disclaimers areillegible, “in fine print,” ambiguous, or relativelyunimportant when compared to other contentattracting the consumer’s attention, then the FTCwill likely assume that the “reasonable consumer”did not understand or perhaps even see thedisclaimers or disclosures (see above). If thedeceptive act or practice was the first contact aconsumer had with a product or service advertised,then the FTC may consider subsequent corrective,truthful statements to be insufficient to eliminatethe deception in the mind of a reasonableconsumer. Matters of opinions and “puffing” donot warrant action, and the FTC considers whetherthe given misrepresentation would be important to How to be A Successful Internet Advertisement Chapter 5 11a consumer’s decision regarding the product orservice. In addition, claims related to health,safety and other matters with which the reasonableconsumer would be concerned are material, as arethe claims dealing with the core characteristics ofa product or service.False advertising is different than deceptiveadvertising. First, the FTC prohibition on falseadvertising applies only to food, drugs, cosmeticsor medical devices. An advertisement, other thanlabeling, is considered “false” if it is misleading ina material respect; and in determining whether anyadvertisement is misleading, taking into account(among other things) not only representationsmade or suggested by statement, word, design,device, sound, or any combination thereof, butalso the extent to which the advertisement fails toreveal facts material in the light of suchrepresentations or material with respect toconsequences which may result in the use of thecommodity to which the advertisement relatesunder the conditions prescribed in saidadvertisement, or under such conditions as arecustomary or usual.An example of a false advertisement that isnot deceptive would include the slogan that Exxongasoline “will put a tiger in your tank.” Obviouslythis is literally false but is understood by thereasonable consumer to be metaphorical. Anexample of a literally true advertisement that isnonetheless deceptive might be a chewing gumslogan that states that it is preferred by “4 out of 5dentists” when the advertiser asked only 5 dentists,all of whom are married to employees of thecompany.It is important to remember that most on-lineservices and Internet service providers will not beliable for merely facilitating the transmission offalse or deceptive advertising (or any other type ofillegal content). Those portions of theCommunications Decency Act that were not struckdown by the U.S. Supreme Court on FirstAmendment grounds protect most Internet serviceproviders from liability for negligentdissemination of illegal content. See Zeran v.America On-Line Inc., 129 F.3d 327 (4th Cir.1997)(used the Telecommunications Act of 1996,47 U.S.C. Section 230 to provide a safe harbor foron-line services by interpreting the act to baractions against Internet service providers fornegligent dissemination of defamatory messages);see also Cubby, Inc. v. CompuServe, Inc., 775F.Supp. 135 (S.D.N.Y. 1991) (pre-CDA on-lineservice that does not control or monitor the contentbut merely transmits it is akin to a magazine orbook distributor and is not liable unless it knowsthat the content in question is illegal). Knowledgeor intentional conduct can destroy the immunity.See Playboy Enterprises, Inc. v. Frena, 839F.Supp. 1552 (N.D. Fla. 1993)(a bulletin boardservice that posts material with knowledge orreason to know that it violates some other party’srights may be liable); Religious Technology Centerv. Netcom On-Line Communications Services, Inc.907 F.Supp. 1361 (N.D. Cal. 1995)(computerbulletin board service and Internet access providermay be liable for contributory copyrightinfringement after receiving notice that allegedinfringer had posted copies of copyrighted workson Usenet newsgroups through the provider’ssystems and continuing to allow alleged infringerto post messages to newsgroups and leaveallegedly infringing messages on its system so thatits subscribers and other users could access them).C. Advertising to ChildrenAdvertising agencies or web site designers areresponsible for reviewing information tosubstantiate claims. When children are involved,particularly children under the age of twelve, thisissue becomes even more important. TheChildren’s Advertising Review Unit (“CARU”) ofthe Council of Better Business Bureaus has setforth some specific principles to keep in mind foradvertising directed to children:1. Advertisers should always take intoaccount the level of knowledge, sophistication andmaturity of the audience to which their message isprimarily directed. Younger children have alimited capacity for evaluating the credibility ofinformation they receive. Advertisers have aspecial responsibility to protect children from theirown susceptibilities.2. Advertisers should exercise care not tounfairly exploit the imaginative quality ofchildren. Unreasonable expectations of productquality or performance should not be stimulated,either directly or indirectly, by advertising.3. Advertisers should communicateinformation in a truthful and accurate manner andin language understandable to young children.4. Advertising should address itself topositive and beneficial social behavior, such asfriendship, kindness, honesty, justice, generosityand respect for others. How to be A Successful Internet Advertisement Chapter 5 12 Care should be taken to incorporateminority and other groups in advertisements inorder to present positive and pro-social roles androle models wherever possible. Socialstereotyping and appeals to prejudice should beavoided. Advertisers should contribute to theparent-child relationship in a constructive manner.Advertisers who communicate with childrenthrough e-mail should remind and encourageparents to check and monitor their children’s useof e-mail and other on-line activities regularly.Advertisers who maintain sites for children shouldnot knowingly link their sites to pages of othersites that do not comply with CARU’s guidelines.Advertisers who transact sales with childrenon-line should make reasonable efforts to providethe person responsible for the costs of thetransaction with the means to exercise control overthe transaction. Children should always be toldwhen they are being targeted for sale. If a siteoffers the opportunity to order or purchase anyproduct or service, either through the use of a“click here to order” button or other on-screenmeans, the ordering instructions must clearly andprominently state that a child must have a parent’spermission to order. In the case of an on-linemeans of ordering, there should be a clearmechanism after the order is placed that allows thechild or parent to cancel the order.The solicitation of personally identifiableinformation from children (e.g., full names,addresses, e-mail addresses, phone numbers)triggers special privacy and security concerns.Advertisers should remind children to ask a parentfor permission to answer information gatheringquestions. The advertiser should disclose, inlanguage easily understood by a child, why theinformation is being requested and whether theinformation is intended to be shared, sold, ordistributed outside of the collecting company.Reasonable efforts should be made to offer parentsthe opportunity to exercise choice and control.Advertisers to children who collect identifiableinformation on-line should make reasonableefforts to ensure that parental permission isobtained. Even if a child is asked to register at asite using his or her full name, advertisers shouldencourage the child to use a “screen name” (e.g.,“Bookworm,” “Skater,” etc.), first name, initials,or other alternatives to full names for any activitieswhich will involve public posting. E-mailaddresses should be solicited on secure sites, whenavailable. If an advertiser communicates with achild by e-mail, there should be an opportunitywith each mailing for the child or parent to chooseby return e-mail to discontinue receiving mailings.Information collection or tracking practicesmust be clearly disclosed, along with the means ofcorrecting or removing information. Thedisclosure notice must be prominent and readilyaccessible before any information is collected. For“real world” personally identifiable informationthat would enable the recipient to directly contacta child off-line, parental consent required. Whenpersonally identifiable information (e-mailaddresses/screen names) will be publicly posted toallow third parties to contact children on-line,parental consent required. For other identifiableinformation such as e-mail address, first name,hometown, parents must be notified of the natureand intended uses and offered the opportunity toremove or correct the information. For all otheranonymous or aggregate information, whethergathered directly or through passive means, thecompany must clearly disclose the nature andintended uses of the information.D. SpammingQuite simply, SPAM is unsolicited e-mail. Everytime you receive an e-mail from an unknownperson offering to sell you software that allowsyou to spy on your neighbors, find anyone in theworld or send your own SPAM to unwittingdupes, that is SPAM. While there has not been agreat deal of litigation on the subject,approximately 15 states have enacted legislationthat either completely prohibits or heavilyregulates the issuance of SPAM. While eachstate’s law is different, there are several commonthreads running through the statutes:1. Would-be SPAMers must provide a wayfor consumers to opt out of receiving additionalmessages. This usually takes the form of an e-mailaddress at the bottom of the advertisement thatallows the user to “unsubscribe” from the e-maildistribution list that received the advertisement.Other times, it is a link to a particular web page.Either way, it is imperative that the e-mail addressbe valid (or the link active) so that consumers havea meaningful opportunity to opt out of receivingfuture messages.2. The entire content of the e-mail must befactually accurate. While this may seem like aneasy rule to follow, most people do not grasp whatis meant by “everything.” For example, the How to be A Successful Internet Advertisement Chapter 5 13originating e-mail address, as well as the routinghistory, must be factually accurate. This meansthat SPAM cannot be sent through “anonymousmailer” programs designed to conceal the identityof the person sending the message. Additionally,the subject line of the e-mail must be factuallyaccurate. Many advertisers place personalmessages in the subject line such as “Where haveyou been?” “I’ve missed you!” or “What’s beengoing on with you?” giving the impression that thesender of the e-mail is a friend of the recipientwhen in fact that is not the case. Under most statestatutes, this type of deception is no longerallowed. If someone tells you to take them off yourlist, you’d better do it. Most state statutes allowwould-be SPAMMERs one free piece of SPAM toeach recipient. However, once that recipient putsthe sender on notice that he no longer wishes toreceive e-mails from him or her, the sender mustcomply with the request and take the recipient’sname off of the e-mail distribution list, usuallywithin seven days. Failure to do so can have direconsequences, as most statutes punish the offenderwith a fine or civil penalty of $5.00 to $50.00 perdisgruntled recipient. Given the size of many e-mail distribution lists these days, that type offigure can get very high, very quickly.There is also a bill wending its way throughCongress that is designed to regulate SPAM on afederal level. The bill contains, in some form orfashion, the rules described above, and in alllikelihood it will preempt all state legislation onthe same topic when it is passed.While the anti-SPAM statutes are out there,there are not a lot of reported cases on theseissues. However, see Cyber Promotions, Inc. v.America On-Line, Inc., 948 F. Supp. 436 (E.D. Pa.1996)(in the absence of state action, a private on-line service has the right to prevent unsolicited e-mail solicitations from reaching its subscribersover the Internet). Also, in Earthlink Network,Inc. v. Cyber Promotions, Inc., a state trial court inLos Angeles County, California granted an anti-SPAMing injunction on the grounds that CyberPromotion’s transmissions of mass, unsolicited e-mail advertisements without the consent of its ISPconstituted a trespass. The law in this area iscontinuing to develop and as more anti-SPAMstatutes make it on to the books (or the federalstatutes supercedes the rest), more litigation in thisarea is very likely to occur.E. Intellectual Property Issues1. Trademark InfringementDomain Name Infringement/Cybersquatting. Most litigation with respect to trademarkinfringement on the Internet has arisen out of theuse and registration of domain names. A domainname is not necessarily a trade or service mark.However, use of another’s trademark or servicemark in a domain name can constitute eitherinfringement or dilution. Many times, a personregisters another’s trademark or service mark as adomain name with the intent to deliberatelydeprive the registered owner of the name. This isusually done so that the registrant can directlycompete with the trademark holder or extortmoney from it in exchange for the sale of thename. Such a practice, called “cybersquatting,”violates the recently enacted Anti-CybersquattingConsumer Protection Act (“ACPA”). When twocompanies have the same trademark or servicemark registered in different classes, either onewould have the legal right to register for thedomain name containing the mark. For example,if Company A, a travel agency, is the owner of theregistered trademark “EZ Travel” in internationalclass 39 (travel services) and Company B, aluggage manufacturer, is the owner of the sameregistered mark in international class 18 (leathergoods), then either Company A or Company Bwould be entitled to register the domain name “EZTravel.com”.It has been generally felt that the use of adomain name or trademark on a website for thepurposes of hyperlinking to another site may beconsidered trademark infringement. Likewise,framing another person’s website without properattribution may result in trademark infringement orother violations of section 43A of the Lanham Act.The best practice is to obtain permission beforeincluding a hyperlink or incorporating another’swebsite via framing.Metatag Infringement. Metatags are key words or phrases embedded in websitesprogrammed using hypertext markup language(“HTML”). Metatags are recognized by Internetsearch engines to retrieve and locate websites. Intwo reported cases, the courts have reachedopposite conclusions regarding whether the use ofa trademark in a metatag constitutes infringement.In Playboy Enterprises, Inc. v. CalvinDesigner Label, a district court enjoined the use of“Playboy” and “Playmate” in metatags where thedefendants had also registered and usedmisleading domain names featuring those marks. How to be A Successful Internet Advertisement Chapter 5 14The defendants were not affiliated with PEI andwanted to attract customers to their sites. Theirunsavory act of registering domain namescontaining PEI’s marks, however, may haveinfluenced the court in enjoining the metataggingas well. See also Playboy Enterprises, Inc. v.AsiaFocus International, Inc., 1998 WL 724000(E.D. Va. 1998).More recently, the Ninth Circuit Court ofAppeals decided Brookfield Communications, Inc.v. West Coast Entertainment Corp., 174 F.3d 1036(9 Cir. 1999). An entertainment-industryinformation provider sued a video rental store inpart to stop it from using “MovieBuff,” theplaintiff’s registered mark, in its metatag. Thedefendant, West Coast, selected the term becauseit owned several registered service marksincorporating the similar term “Movie Buff” (nospace between the two words, in case you werewondering what the difference was). The Court ofAppeals remanded the case to the district courtwith instructions to enter a preliminary injunctionto prevent West Coast from using “MovieBuff” asa metatag. The Court first conceded that the useof a term “MovieBuff” in a website metatag willresult in less confusion than where the term is usedin a domain name (i.e., www.moviebuff.com). Id. at 1062. When the user inputs “MovieBuff” intoan Internet search engine, the list produced by thesearch engine is likely to include both WestCoast’s and Brookfield’s websites. Id. Thus, inscanning this list, the web user will often be ableto find a particular website he is seeking. Id.Even if the web user chooses the websitebelonging to West Coast, he will see that thedomain name of the website he selected iswww.westcoastvideo.com. Id. The Court did find that the use of the term“MovieBuff” in metatags could result insomething known as initial interest confusion:Web surfers looking for Brookfields’“MovieBuff” products who are taken by a searchengine to “westcoastvideo.com” will find adatabase similar enough to “MovieBuff” such thata sizable number of consumers who wereoriginally looking for Brookfields’ product willsimply decide to utilize West Coast’s offeringsinstead. Id. at 1066. Let’s say you have two retailpolo mallet chains: Sam’s and Dave’s. Let’s saythat Dave’s puts up a billboard on a highway thatreads "Sam’s Polo Mallets: Two Miles Ahead atExit 7." One of Sam’s stores is really located atexit 8, but one of Dave’s stores is located at exit 7.Customers interested in shopping at Sam’s willpull off at exit 7 and drive around looking for it.Unable to locate one of Sam’s stores but seeingone of Dave’s stores right by the highwayentrance, they may simply choose to buy theirpolo mallets there even if they normally prefershopping at Sam’s, since it may not be worth thetrouble to continue searching for one of Sam’sstores if one of Dave’s stores is right there. That isinitial interest confusion--even though theconsumer has not been tricked into thinking he isshopping at Sam’s, Dave’s has still caused Sam’sto lose possible business by using Sam’ s nameimproperly.Not all types of metatag infringements areillegal. In Playboy Enterprises, Inc. v. Welles, adistrict court permitted the use of “Playboy,”“Playmate,” and “Playmate of the Year” in thedefendant’s metatags where the defendant was aformer Playboy model, finding that the markswere used by the defendant to identify herselftruthfully. That case is distinct from the CalvinDesigner Label case because the defendants in thelatter case were not affiliated with PEI and themarks did not describe them in any way. In fact,the Ninth Circuit in Brookfield acknowledged thatusing the “MovieBuff” mark descriptively withinthe body of the web page (i.e., “Why pay forMovieBuff when you can get the same thing herefor free”) is not prohibited. BrookfieldCommunications, Inc. v. West CoastEntertainment Corp., 174 F.2d at 1066. Similarly,at least one court has held that metataginfringement does not violate the provisions of theACPA. See Bihari v. Gross, 2000 WL 1409757(S.D.N.Y. 2000).Triggering. In 1999, Playboy Enterprises, Inc. sued Netscape and Excite in the Central District ofCalifornia for trademark infringement and dilutionto enjoin the use of “playboy” and “playmate” inad banner programs. As indicated above, somesearch engines often charge more for "targeted"advertising. Excite's search technology, whichpowered the search engine at Netscape's Netcenterportal at the time the lawsuit was filed, uses 450keywords, including "playboy" and "playmate," togenerate an array of sex site ads when a visitorconducts a search. Advertisers buy into thekeyword program to reach users seeking contentrelated to their offerings. But Playboy Enterprises,Inc. (“PEI”) said the program diluted itstrademark. PEI contended that the defendants were How to be A Successful Internet Advertisement Chapter 5 15intentionally diverting web users from PEI’sproducts and services.U.S. District Judge Alicemarie Stotlerdisagreed with the publisher. In response to PEI’srequest for a preliminary injunction to halt theportals from using PEI 's trademarks, Stotler saidPEI 's trademarks were not infringed by theportals' ad technologies because the terms"playboy" and "playmate" are part of the Englishlanguage and the company can't dominate theirusage: "Indeed, by seeking a prohibition on alladvertisements that appear in response to thesearch words "playboy" and "playmate," [PEI]would effectively monopolize the use of thesewords on the Internet," the ruling stated.The decision is significant because it givessearch engines, Net advertisers, and Web sitedevelopers clearer rules for using other entities'registered trademarks to bolster traffic to theirsites or customers. However, the logic of thedecision may be flawed in several respects.Trademark infringement is the “use incommerce [of] any reproduction, counterfeit,copy, or colorable imitation of a registered mark inconnection with the sale, offering for sale,distribution, or advertising of any goods orservices on or in connection with which such useis likely to cause mistake, or to deceive.” Classic“commercial use” consists of placing the mark ongoods to be sold. The Netscape court found thatdefendants did not use “playboy” and “playmate”to identify any goods or services. Consequently,the court held that placement of the words“playboy” and “playmate” in the computer code totrigger advertising was not a use of the marks.This, however, is a distinction without meaning. Itis clear that a defendant can infringe a markwithout placing that mark on its own goods. Forexample, a restaurant that takes an order for“Coke,” but then serves Pepsi to the unsuspectingcustomer infringes the “Coke” mark.In seeking an analogy for ad banner triggering,the Netscape court looked to the many cases onweb page metatagging. Triggers and metatagshave important common features that are relevantto the commercial use issue. In both, the wordsare invisible to the user (except to the extent thatthe user types in his own search terms and theresults page displays them as they are entered).Additionally, both triggers and metatags rely on auser’s search terms and artificially attract thatuser’s attention to a website. Nevertheless, aperson using a search engine does not normallythink of an ad banner as offering informationrelevant to a search. In contrast, a search resultthat appears on a results page because of itsmetatags would be on the list with all the otherresults and be presented as relevant to the query.This would seem to mandate taking a harderstance against metatag infringement, which morepeople are more likely to look at, than againsttriggering.Additionally, the Netscape court’s finding thatthe marks were not “used” by the defendantsseems inconsistent with the case law surroundingmetatag placement. The court focused on thedistinction between marks and search terms. Afinding that the defendants used the words assearch terms confuses the technology involved.By typing the words in, the user is truly using thewords as “search terms” and not infringing therights of the trademark holders. However,Netscape and Excite are doing more than usingthese terms in their search engine. They are usingthe words to trigger advertising. A search enginewould deliver the same search results in thepresence or absence of banner triggeringalgorithms. In other words, if metatagging isworthy of judicial censure, then triggering, whichis far more deliberate, should be worthy of censureas well.The court’s analysis seems incomplete on aless technical level as well. While the words“playboy” and “playmate” may be the searchterms of the user, they are also recognized bymany consumers in connection with the goods andservices of PEI. In that way, they are marks. Thewords may not connote adult entertainment inordinary English, but consumers, particularlythose who are searching for words like “playboy”and “playmate,” associate these words with adultentertainment because of PEI’s investment. Usingthose words as triggers is clearly a commercialdecision based on PEI’s prominence in themarketplace.The likelihood of confusion element is lessproblematic. An infringement claim dependsprimarily on “the likelihood that an appreciablenumber of ordinary prudent purchasers are likelyto be misled, or simply confused, as to the source,sponsorship or affiliation of defendant’s goods orservices.” There does not seem to be a likelihoodof confusion here. A user who clicked the bannerand explored the site would quickly realize thatPEI is not the source of the advertised productssince PEI’s marks would be nowhere in sight. How to be A Successful Internet Advertisement Chapter 5 16Additionally, the PEI links would appear innormalized, blue font, somewhere down the page,and possibly require the user to scroll down. Thecompetitor’s link would be a large, colorful, oftenanimated graphic at the top of the page. Whileeven inexperienced web users quickly learn totrust text results more than ad banners, sometraffic goes through the banner, and PEI losessome of these potential customers.In the end, courts may be more justified inprotecting the owners of marks against banner adtriggering than against metatagging. To satisfy thesearching needs of their customers, search enginecompanies have great incentive to engineer arounddeceptive metatagging; indeed, they are alreadydoing so. In contrast, an ill-triggered ad bannerwill not diminish the effectiveness of a user’ssearch when he explores the results list. Secondly,search engine companies receive no financialsupport from the owners of the deceptivelymetatagged sites. Search engine companies,however, receive substantial revenue from thosewho advertise on their pages. Because of this, thesearch engine industry will not police bannertrigger abuses as efficiently as those related tometatags. Copyright InfringementCopyright issues in the advertising arena areless abundant than their trademark counterparts,Napster notwithstanding. One thing that must beremembered is that the owner of a license to use acopyrighted work in a given media may or maynot have the right to use that work over theInternet or in digital format. In Tasini v. New YorkTimes Co., freelance journalists sued several majornewspapers and magazines, as well as Lexis-Nexisfor copyright infringement. The journalistscontended that the reproduction of their work indigital form constituted the creation of anunauthorized derivative work. The court rejectedthe infringement claim, holding that a newspaperor magazine is a collective work and the owner ofthat collective work may revise it under 17 U.S.C.§ 201(c) by republishing it in a digital form.Performance rights for musical works playedover the Internet may be obtained from theperformance societies such as ASCAP or BMI.These rights would enable a radio station, forexample, to play music over the World Wide Webvia streaming software. However, the WorldWide Web is a multifaceted media. Performancerights grant no license with respect to setting themusical works in timed synchronization withvideo, graphics, or other visual images.Consequently, a synchronization license wouldhave to be obtained by the owner of a website oran advertiser who uses music as background foranimated images or video broadcast over theInternet.An advertiser wanting to own the copyright ina website created by an independent contractorshould enter into a “work for hire” contract. Thisarrangement would allow the website owner tomodify the website without the permission of theinitial website developer.3. AppropriationAppropriation is the commercial use of aperson’s identity (name, likeness, voice, etc.)without that person’s consent. For example, ifVictoria Secret puts up a picture of Anna NicoleSmith in their catalog to suggest (directly orindirectly) that Ms. Smith wears its products, Ms.Smith has a claim for appropriation, regardless ofwhether she wears the lingerie or not, if she didnot give permission for the use of her photo.Damages are largely determined by the perceivedcommercial value of a person’s name, likeness orvoice. That is why it is usually celebrities of somesort that bring claims under this law and why thelaw is actually codified in a statute in Californiaand New York.When it comes to the Internet, appropriationcan become an even bigger problem. Computerprograms like Adobe Photoshop allow people tolift pictures from almost any source and placethem in almost any scenario. Celebrity “fakes” area popular Internet pastime. This is where acelebrity’s face is placed, via computer, on thebody of a naked woman and edited so that it lookslike a nude picture of the celebrity was taken.Although this is usually just for personalrecreation, commercial appropriations over theInternet are all too common.That is not to say that all uses withoutpermission are illegal. In Stern v. Delphi InternetServices Corp., 626 N.Y.S.2d 694 (Sup. Ct. 1995),Howard Stern sued Delphi because his photographwas used without his permission in anadvertisement for the on-line bulletin boardservice Delphi had set up to debate Stern’s ownpolitical candidacy for governor of New York.Delphi, as an on-line computer network, offersthree types of information services to itssubscribers: (1) “hard information,” such as newsstories, stock quotes, or reference material; (2) How to be A Successful Internet Advertisement Chapter 5 17computer games; and (3) user interaction, meaningelectronic mail, on-line conferences or bulletinboard messages.Section 50 of the New York Civil Rights Lawmakes commercial misappropriation of a person’sname or likeness a misdemeanor. It provides inrelevant part: “[A] person, firm or corporationthat uses for advertising purposes, or for thepurposes of trade, the name, portrait or picture ofany living person without first having obtained thewritten consent of such person . . . is guilty of amisdemeanor.” Section 51 of the Civil RightsLaw also authorizes a civil action for injunctiverelief and damages against a party who violatessection 50. To state a claim under 51, plaintiffmust show that: (1) defendant used his name,portrait or picture, (2) for purposes of trade oradvertising, (3) without his written consent.It was undisputed that Delphi used Stern’sname and picture without his permission, and thatboth were used “for advertising purposes” withinthe meaning of the statute. Delphi contended,however, that its use of Stern’s name andphotograph fell within the scope of the “incidentaluse exception” to Sections 50 and 51. Citing priordecisions, the court acknowledged that a newsdisseminator is entitled to display the name andphotograph of people who are the subject of theirnews offerings for purposes of attracting andselling the news service, whether it is newspapers,television or the Internet. Although only paidsubscribers may access Delphi’s on-lineinformation services from their computers orterminals, its service was likened by the court to anews vendor or bookstore, or a letters-to-the-editorcolumn of a newspaper, which require purchase oftheir materials for the public to actually gainaccess to the information carried. Because Stern’sname was used by Delphi to elicit public debate onStern’s candidacy, the court concluded that its usein the advertisement is afforded the sameprotection as would be afforded a more traditionalnews disseminator engaged in the advertisement ofa newsworthy product. The court noted that “thesections in the law were designed to protect anindividual against ‘selfish, commercialexploitation’ and that in construing the law, “thecourts have looked to its underlying purpose – theneed it was intended to fill –rather than adheringto its exact letter.” Since the underlying purposeof the statute is to protect privacy, no liabilityexists when the name or picture of a public figure(who has no complete privacy) is used unless thepublication is knowingly false or may beconsidered a blatant “selfish, commercialexploitation” of the individual’s personality.F. PrivacyPersonal information is collected almost everytime someone accesses a website. Through theuse of “cookies,” and other information gatheringtechnologies, a website owner can tell what otherwebsites a particular user has visited and, usingthis information, speculate on the interests of thepeople who are visiting the website.Some personal data is collected legitimately.One company utilizes software placed on theuser’s personal computer (with his consent), calleda “PC Meter,” which keeps track of the user’scomputer habits. The PC Meter (R) is much likethe Nielsen People Meter used for televisionratings, in that it creates a record of all activity ona PC. A different approach, utilized by some sites,is to require registration, often including the use ofa questionnaire, before the website content is madeavailable.Most data, however, is gatheredsurreptitiously. In a report on Internet privacyissued in June 1998, the FTC noted that 92% ofwebsites surveyed collected personal informationfrom visitors but only 14% disclosed how thatinformation would be used.To discuss the various legislative,administrative and private sector privacyinitiatives is beyond the scope of this article.What is important to remember is that mostconsumers expect websites to contain some sort ofprivacy policy, even if the site collects no personalinformation whatsoever. While most sites are notrequired by law to have such a policy (yet),consumers feel more secure if a privacy policy inplace. That being said, it does a company no goodto have a privacy policy if nobody in the companyfollows it. In fact, you can have a far worselitigation situation on your hands if you have aprivacy policy and do not comply with it, sincethat can lead to claims for breach of contract orviolation of state and federal deceptive advertisingpractices. ConclusionWhile Internet advertising is not the boommarket it was two years ago, it still accounts for alarge percentage of the money being made off ofthe Internet today. While different forms ofadvertising may come and go in a span of months, How to be A Successful Internet Advertisement Chapter 5 18the laws that regulate the form and content of thisadvertising remain the same and they are largelyanalogous to laws and regulations in existencebefore the Internet ever became popular. Giventhis fact, while they may struggle with the righttype of on-line advertising to implement,businesses using the Internet for advertisingshould be able to stay out of legal trouble as easilynow as they (hopefully) did before.