• by Wendy Davis  @wendyndavis, January 13, 2009

In the 52-page complaint to be filed today, the Center for Digital Democracy and U.S. Public Interest Research Group allege that emerging mobile marketing shops deploy the same "unfair and deceptive" behavioral targeting strategies as older Web marketers.

"Mobile devices, which know our location and other intimate details of our lives, are being turned into portable behavioral tracking and targeting tools that consumers unwittingly take with them wherever they go," the complaint alleges.

The groups are asking the FTC to probe how nascent mobile ad companies deploy techniques like behavioral targeting (or serving ads to people based on their online activity) and geo-targeting (serving ads based on people's physical location). The complaint also asks the FTC to order mobile ad companies to notify consumers about how their data is used, and seek explicit consent to its collection.

The complaint mentions a host of mobile marketing companies, and specifically singles out three--mobile software developer Bango, local online advertiser MarchEx, and mobile ad network AdMob--for allegedly gathering data without adequate notice to consumers.

Currently, marketers that send text ads to users first seek people's opt-in permission--which is a requirement under federal Can-Spam regulations. But marketers also are increasingly exploring search ads and banner ads, which are not subject to Can-Spam.

In addition, some companies are now tracking visitors to mobile Web sites. For instance, Ringleader Digital recently unveiled a "media stamp" that creates and stores profiles about cell users based on the mobile sites they visit. The company, which collects information based on characteristics of the device, says it can gather enough data this way to create unique, "anonymous" stamps for every mobile phone user.

Although the mobile industry is still young, the advocates argue that the FTC should get involved before practices become entrenched. "It is especially critical that FTC act now," states the complaint, "as an even more interactive Mobile 2.0 environment looms on the horizon."

As with PC-based behavioral targeting, mobile marketing companies do not typically collect names, phone numbers, email addresses or other so-called personally identifiable information.

But advocates say the information gathered is so detailed that it poses a threat to privacy. "They don't need to know a name to know that Mobile User 'X' likes to search for fast food, bought a new car recently, and went on the mobile phone looking for a lower-interest credit card," said Jeff Chester, executive director of the Center for Digital Democracy.

Mobile is also seen as well-suited for targeting because the devices are more personal than computers. While family members or office colleagues might share a computer, they rarely--if ever--share cell phones. What's more, the potential to pinpoint cell phone users via geo-location data raises an additional layer of concerns.

"Although the new location-based services may be useful to consumers, they also represent an entirely new advertising medium, one with potentially grave privacy implications," the complaint alleges.

But some observers say geo-location targeting is still a long way off. "There's no valuable data for us to use," said Eric Bader, a partner in the mobile marketing company BrandInHand. "No carrier or handset maker or software provider related to global positioning can tell me that you are currently on the New Jersey Turnpike near Exit 13."

While the mobile ad market is small for now, accounting for only around $878 million last year, revenues are expected to swell to $6.5 billion by 2012, according to research company eMarketer.

It's also drawing the attention of major Web companies. Just last week, in a much anticipated move, Microsoft announced a five-year mobile search deal with Verizon Wireless. While the companies didn't release financials, The Wall Street Journal reported that Microsoft and Verizon will share ad revenue, with Microsoft committing to pay Verizon between $550 million and $650 million over the life of the agreement.

In 2006, the same groups behind this complaint filed papers with the FTC that sparked an ongoing investigation into online behavioral targeting.