Commentary

Playing in the Big Leagues

When the 108th Congress adjourned in December 2004, it concluded a very active Congress for the online advertising industry, including the passage of the CAN-SPAM Act and House passage of spyware legislation. With spyware legislation currently progressing in the House and privacy legislation on the horizon, it is appears that the 108th Congress was merely "spring training" for significantly greater challenges this Congress.

The question remains how the industry will respond to the challenges ahead. A U.S. Internet Industry Association (USIIA) white paper entitled "Internet Public Policy in 2004," expressed alarm over the industry's "inability... to engage in policy issues with anything more than loose coalitions and ad hoc committees." Most significantly, USIIA cited the industry's (i) failure to engage in educational or outreach programs with policymakers leaving "a disastrous gap in their ability to understand the industry and its issues," (ii) its lack of early warning capabilities that frequently leave it off guard and (iii) inability to quickly raise and commit resources to combat threats.

The points made in the USIIA white paper are well taken, considering the fact that nearly two-thirds of the USA Today Internet 100 and top marketers according to OMMA magazine do not belong to a single Internet advocacy group such as the Digital Media Association, Information Technology Industry Council, Internet Alliance, NetCoalition, Network Advertising Initiative, TechNet, USIIA, or the Congressional Internet Caucus' advisory committee. Of the one-third that actually do belong to an association, I suspect only a fraction are actively involved with legislative issues.

The industry's weakness is evident in the House passage of spyware legislation last fall as well as at the state level with the passage of the California spam and Utah's spyware laws these past two years. In visits to both Washington D.C. and Sacramento, several offices have told me that they have heard little or nothing from the industry on key issues such as spyware and spam. While there has been substantial improvement in the industry's response to the pending spyware legislation, there still are many prominent industry players not involved.

The lack of significant regulation has enabled the industry to flourish, but also has created a false sense of security, as too many industry leaders have failed to focus on regulatory risks emanating from Washington D.C. or state capitols. If asked, few of these leaders would volunteer to have their business plan set by people who may not understand the industry. But this may be the result if the industry continues to ignore these halls of power.

The 109th Congress will not only address spyware legislation, but will soon commence work on an omnibus privacy bill. In addition, pending FTC reports on subject line labeling and on the effectiveness of the CAN-SPAM Act could lead to efforts to amend the act. All of these issues could have an enormous impact on the industry.

It is time for this maturing industry to step up to the plate and flex its muscles. It's also time that the industry started playing both offense and defense. That means every business in this market should at least meet with its representatives wherever it has a significant presence in order to introduce their company, explain the industry, and issues of concern. It is important to develop a relationship rather than rely on last-minute frantic calls on the eve of important votes. This is especially true for online advertising since it may take some time before a member or staff fully understands the technology and business models involved. Few people understand the critical role online advertising plays with today's Internet and you should make sure your representative is not one of them.

Business leaders should not be intimidated by such meetings since it involves doing what they do best - pitching their company. Nonetheless, there are many helpful sites on the Web providing tips on how to speak with your Congressman, including http://www.butera-andrews.com/10_tips_for_hill_visits.htm. (You can identify your Congressman by going to http://www.house.gov/writerep/ and typing in your zip code).

Finally, the industry needs to devote financial resources to this effort. For example, a heavily regulated company such as Charles Schwab has its own PAC and between its PAC and employees gave $1 for every $3,463 in revenue over the past three elections, which may explain why it was invited to participate in the White House's 2002 Economic Forum. How does your company compare?

The industry's political spring training is over. It's time to step up to the plate and play in the big leagues. With baseball returning to Washington D.C., there is certain to be at least one losing team this year. If the industry doesn't step up to the plate, however, they are likely to lose as well.

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