• by June 7, 2002

MODERATOR, Tom Hespos, Internet Strategist, Mezzina Brown and Partners: The user of a computer has a certain degree of control over his computer’s desktop. Since computers are still the dominant tool used to access content on the Internet, that also gives the user a degree of control over how he displays and digests Internet content. Internet publishers have always assumed that visitors to their websites will accept any accompanying advertising along with the content that they provide, but perhaps they assume too much. Web users can exercise their control over their computers and install software that alters the way that content is presented to them. Ad-stripping software, like AdSubtract and WebWasher, is freely available. Companion viewbars can be installed that work with the web browser to provide additional functionality and serve ads where none were originally intended. Other third-party software can alter how content is displayed in ways that publishers can’t really control. So as the general web population gets more tech-savvy, more and more people may decide to alter the ways in which publishers provide content to them. But at some point, publishers realize that this is a threat to the way that they are currently doing business. They talk about implied contracts between the web user and the publisher: The web user has to put up with the advertising that serves to monetize the production of the publisher’s content. They assume that anything that interferes with that implied contract is an unfair attack on their business model. We’ve had a couple of struggles with this concept since the Internet became a commercial medium. The core of the issue is: Does the user’s right to control the look and feel and format of his desktop trump the right of the publisher to support his content by displaying advertising to the user? What if we have users out there who don’t want to be reached with advertising? Does a web user have the right to use the web to gather content without gathering any of the advertising or the sponsorship elements that underwrite that content?

Media: First let’s get some background on the Gator controversy. Back in August, the IAB said Gator was engaging in unfair business practices, because it’s pop-ups obscure advertising and/or editorial content on websites, infringing on trademarks and relationships. Gator responded by filing suit against the IAB, saying there’s no conflict, because the consumer sees the publisher’s ad first and can choose which ad to click. Basically, as I understand the product, it’s a software application that a user can download completely on her own and then run on the computer while surfing the web. Gator can help that person do certain tasks, such as fill out personal-information forms or price-comparison shop. And it comes in a pop-up window that sits in the toolbar at the bottom of the window until it’s activated.

Jeff McFadden, CEO, Gator Corp.: That’s right. It’s a free software application that’s supported by advertising. And when people download the software, they see a fairly large screen that explains what the software does and that it comes with advertising. Gator is active on a little over 8 million desktops as we speak. The form-filling part of the application was used over 100 million times in the month of July alone at over 700,000 different websites. And unlike with, say, Microsoft’s Passport, all the consumer’s personal information is stored on their own computer and not on our or anyone else’s server. So it’s a rather popular application and it’s delivering a fair amount of value.

Media: Does the user have any control over where the Gator window pops up to08Ok

McFadden: In some cases yes, in others no, though each of the windows can be dragged around the screen once it pops up.

Media: Will it pop up again to where I drag it, or to the original default position? McFadden: Typically, when we pop up to help out somebody fill out a form, we try to go over to the right side of the screen, because that’s usually where you won’t cover up the form elements.

Media: As far as the advertising part of this, what form does that take?

McFadden: It’s pop-up windows that typically appear in the center of the browser or in the lower-right-hand corner of the monitor.

Media: So that’s a separate window from the form helper?

McFadden: Yes it is.

Media: And are those fixed in terms of where they get placed? Or is it possible to move them around and get them off the browser?

McFadden: The ones that are on top of the browser can be moved. The one that’s in the lower-right-hand corner is something that slides up and then goes away on its own, so that’s more anchored at that location.

Media: Is there anything more to it than that? Where’s the problem?

Hespos: A lot of the controversy comes up where an ad that’s delivered by the Offer Companion part of the software obscures an ad that’s delivered by the publisher. I think that’s the nature of what the IAB problem is.

McFadden: In their press release, they say that they don’t like the fact that it covers up advertising and/or editorial content on the web pages.

Media: Couldn’t the same be said of pop-up windows that the publisher wants? If the publisher has an advertiser who’s delivering a pop-up, a pop-under, a pop-over, whatever, that would also be covering over part of the browser, wouldn’t it? Except in that case, the publisher would have agreed to it. So it’s not so much the obscuring of content, or the sanctity of the browser space. It’s really a question of who has the control.

McFadden: I was looking at the Fortune.com website last week, and then I went to Forbes.com. Up popped a window right in the center of the homepage, asking me to subscribe to the print edition of Business 2.0. That window was displayed by the Fortune website. It’s what’s called a site-exit pop-up. And it was sitting right on top of an advertisement and the headlines on Forbes.com. The user didn’t have any control over that, and I’ve gotta believe they were pretty confused as to where that came from. I knew that Business 2.0 had recently been acquired by Time-Warner and that it was the Fortune site that had displayed it. But it’s the same kind of thing that websites themselves are finding a need and interest to do. We do it a lot more effectively because we can do it in a targeted fashion.

Joseph Jaffe, director of interactive media, TBWA/Chiat Day: I’d like to be on the fence about Gator, but I do have some strong points of view on either side. There’s this thread that I keep picking up on in the press about “hitting the industry when it’s down.” The fact is, we’re hobbling right now, we’re struggling right now. And Gator in many respects threatens to steal the lunch of publishers. I agree with you in terms of relevant and precise targeting. But I’m more curious as to how that fits into the picture when this is happening at the expense of other advertising. What about DHTML, EyeBlasters, and Ad4Ever type products? Are they hijacking the space as well? If so, do they need to be on the table as well? Do we need to be broadening the frame of reference in terms of how we define adjacking, for example? Or are they being treated differently, and if so, why?

We’ve been so enamored with technology for technology’s sake—unit sizes, rich media—that we’ve forgotten about creativity itself. When I ask people to name their Top Five interactive campaigns, if they can list any, it’s X10 or Shock the Monkey or “Your Connection Is Not Optimized.” And that’s probably indicative of the situation. I think we need to be able to come up with a much better and extensive list of the victories rather than concentrating on the contentious issues. Right now, Gator is front and center.

Hespos: Just last week, I saw an ad I was running on behalf of one of my clients get covered up by a rich media pop-up ad for somebody else. There are a lot of pop-ups, pop-unders out there, and a lot of users resent them. Have some publishers taken things too far? Should users have a way to prevent the spawning of new browser windows?

Jaffe: I often cite (though it doesn’t mean I’m a frequent visitor [laughter]) Playboy.com’s Jack Daniels execution, which I think was outstanding—maybe partly due to the fact that Hugh Hefner was involved. But the fact is, it was a full-screen commercial that was nonclickable and had a frequency cap of one. That was the entry experience; there was no way around it. But I would be astounded if there were many complaints. I believe that’s where the industry is going right now. I read somewhere the other day that a 468x60 banner equates to something like an eighth or a ninth of a page of a typical magazine. So we’ve been competing on unfair terms.

Maybe this does take the control away from the consumer if we end up not with pop-ups, pop-unders, pop-overs, but with something that’s a little bit more intrusive, but through creativity, targeting, and relevance, delivers the right message to the right person at the right time.

McFadden: Advertisers and agencies have pushed the price of conventional advertising down so low that it’s crushing the publishers. I started out on the web-publisher side back in 1995, helping to start Excite. And I’m watching it and several others on the verge of extinction. This isn’t being done with malice or vindictiveness. The advertisers and agencies are voting with their checkbooks: that the advertising they’ve had a chance to buy so far isn’t working very well. And if web advertising is going to thrive—or even survive in the near term—we need something that works better. That’s what we’re trying to bring the party. Our mantra here is that relevance is what matters. The net of what we do with our advertising model is we’re able to recognize when a consumer is, perhaps, in the market for a minivan. And over the next days and weeks after we recognize that, we can deliver advertising for minivans to that consumer. And it’s because of that that we get double-digit click-through rates. And we sell the advertising at much higher prices, because it’s so much more effective. And we can deliver actually a lower frequency of the advertising to the consumer. And that’s why so many Fortune 500 companies are knocking on our door to buy what we’re selling.

Media: As I surf the web, is there currently a way for the sites I visit to know that I may be shopping for a minivan? Do I carry a cookie, a big sign on me that says: “Buying a Jeep”?

McFadden: No, that’s the point. Most websites, take Yahoo for example—Yahoo is not going to have much of an idea which of their users are interested in a minivan. They can see a few of them who might do a search on Yahoo for a minivan, or might go the Yahoo Auto section, but in the auto category alone, where audience overlaps, we see seven car-buyers to every one that Yahoo can see. And that allows us to deliver very relevant advertising that works for advertisers. And it must be working for consumers too, or they wouldn’t be clicking on it. In the auto category, our click-through rate is about 13 percent.

Media: Wasn’t there concern about users being identified and having their movements tracked around the web?

Hespos: There have been companies that have launched exploratories into recognizing a consumer’s behavior online.

McFadden: On the privacy point, one of the things that we’ve done from the get-go is: We don’t want to know who our users are. We take great pains to make sure that they’re anonymous to us. Because if we don’t know who a user is, we can’t cause a privacy problem for them. We also look for very specific cataloged events that happen in the browser; we’re not interested in the entire clickstream, only a very tiny portion of it. When somebody is shopping for an SUV or a minivan or a camera or flowers or a new mortgage, those are the kinds of things that cause our software to wake up and take notice. But again, it’s all anonymous.

Jaffe: There are some other tools out there that are able to gauge the clickpart from site to site and “follow people around.” And if you go to a tool like Media Metrix, you are able to pull a simple source-loss report; you’re able to determine one site on the front and back end.

McFadden: Several research companies have small panels of people where they can provide aggregate information about surfing habits. The difference with Gator is that we have permissioned access to the consumer, both on the information side—understanding what some of their implied interests are—and on the access side. So we identify people who are interested in minivans, and we can then talk to them on behalf of the automakers. And again, any consumer who doesn’t like our software can uninstall it with a few clicks of the mouse. But because the advertising is relevant to what the consumer is interested in at any given moment, the click-through rates range from 6 to 26 percent. Conventional advertising on the web is, last time I looked, two-tenths of a percent or something like that.

Jaffe: Another thing I want to ask you about that I read about Gator is that ads are able to be served on sites that do not offer any kind of advertising. And my concern here is what happens when the brand experience is disrupted or interrupted.

McFadden: The very nature of our product, across the board, is that it pops up on various websites when it can deliver relevant advertising or other kinds of value. Most of the time, when Gator’s popping up to help somebody fill out an order form, it’s on top of a page that may not have any advertising on it. When we are popping up a little Price Helper indication when somebody is looking at a digital camera at XYZ.com , that’s on a page that probably doesn’t have advertising on it. And we might pop up an advertisement for a sports car when a consumer is on an automotive site. That’s the nature of what we do. We are trying to recognize context and deliver relevant services and advertising.

Jaffe: By depriving publishers of incremental revenue today, it could forseeably result in more closures and less content available. And that’s not going to be a good thing for the industry in the long term. Gator is perhaps being scapegoated to some extent, but the concept of adjacking is quite a scary thought. It comes down to: What goes around comes around. Today, you’re the hijacker, tomorrow, you’re the hijackee. There’s got to be a high road, and if Gator is able to create some kind of a win-win situation, then we might be better off. But if there’s a cannibalization, it’s going to end up hurting all parties.

McFadden: I saw an interview with Rich LeFurgy, the past chairman of the Internet Advertising Bureau, and he said that he has one of those TiVo Replay boxes and how nice it is to watch television shows without the commercials anymore [laughs]. Lots of things are going to change here as consumers are empowered. What we’re able to do is deliver relevant advertising to consumers. That is certainly good for advertisers; it’s good for consumers. And there are ways that we can work in cooperation with website publishers as well to display the relevant advertising to the consumer instead of a run-of-site ad or a house ad or something like that. What I would encourage advertisers and agencies to do is, tell publishers you’d like to buy that kind of advertising. In fact, it’s already happening. We have over 200 advertisers and lots of Fortune 500 companies, lots of Fortune 100 companies already buying. And those same advertisers are the ones that have pushed conventional web advertising down to CPMs of 30 cents, 50 cents, 70 cents. The publishers can’t exist on those kinds of CPMs. There’s got to be a solution to this, and I think we’ve got it. I am talking to publishers as we speak. Certainly, there are those who think at first blush they should try and kill Gator because, “Gosh, they’re going to be covering up ads and that’s the last nail in the coffin.” A better way to look at this is how can we work together to take this ability that we’ve got and turn this whole thing around.

Media: What happens when the browser itself, and not an add-on application, allows me to enter my interests and then offers me things as I surf the web?

McFadden: There are some products out there that do things like that, that are more intimately tied to the browser. Microsoft has one, SmartTags, that they’ve been contemplating releasing, and it’s controversial. And there are others. Some consumers really like that stuff and others really hate it. That’s why this is all goin7Bts work out, because the consumers are going to make wise choices.

Gator is brand-new. I was expecting there to be an adoption curve. If this isn’t working for consumers, they’re going to pull the plug on it. And if it isn’t working for advertisers, they’re not going to buy it. Advertisers want to buy things that work. Most of them don’t want to buy things that just annoy people.

McFadden: I’ll reserve judgment and defer to the consumer, who is and always will be (in this medium) five steps ahead of the marketers and advertisers.

Jaffe: Tom started out by asking the question about the user’s right to control the desktop: When does that begin, when does that end? I think it’s naive to think advertisers won’t find their way onto and beyond the browser—and indeed, onto the desktop. In fact, it’s happening already: there are vendors who are branding the desktop, they’re also serving ads onto of the desktop—and no connection to the Internet is required for an ad to be shown! Ads are downloading while the user is connected to the Internet but they don’t necessarily have to be on for them to view the ad.