• by Wendy Davis  @wendyndavis, May 6, 2008

Two leading advocacy groups intend to file a complaint with the Federal Trade Commission about mobile marketing, Jeff Chester, founder and executive director of the Center for Digital Democracy, will announce today.

"We're filing a complaint to force the FTC to take a proactive stance," Chester said. Mobile ad companies "incorporate the same problematic business practices that we witnessed with PC-based broadband marketing, including behavioral targeting and profiling techniques--except that this time they know your location," he said.

Chester will make the announcement today at an FTC town hall meeting about mobile ads and consumer protection generally. Joining the Center for Digital Democracy in the complaint is the U.S. Public Interest Research Group. Those groups currently are pursuing an FTC complaint about behavioral targeting generally. They argue that marketers should not track people's Web-surfing activity for the purpose of compiling profiles about them without first obtaining their consent.

The Federal Communications Commission already prohibits marketers from sending text message ads to consumers without their opt-in consent, but some other types of nascent mobile ads--such as wireless application protocol banners or search ads--are not similarly restricted.

Chester said he hopes to influence policy now, while the mobile ad market is still in its infancy. Specifically, he intends to call on the FTC to create a task force that will include consumer representatives and industry leaders to craft a marketing regime that gives priority to privacy. He said he also intends to push for special rules regulating mobile ads to children and teens.

Some observers say that mobile marketing raises more privacy concerns than desktop-based behavioral targeting, because mobile companies can potentially determine a user's precise physical location. By contrast, targeting that relies on cookies to track a user's Internet history is usually anonymous and not tied to offline information such as locale.

For marketers, the ability to send an ad to someone as he passes by the shop is an obvious boon, but consumer groups worry that it's potentially intrusive. "Privacy advocates are concerned that it could be misused," said D. Reed Freeman, a partner with the law firm Kelley Drye & Warren and a former staff attorney in the FTC's Bureau of Consumer Protection. "It's the 'Minority Report' paranoia," he said. In the dystopian "Minority Report," Tom Cruise's character faces sales pitches from talking billboards.

The potential privacy threat has already spurred industry groups to propose guidelines that call for consumers' opt-in consent to location-based marketing. Last month, the wireless association CTIA issued best practices guidelines for location-based services that call for consumers' consent. They say providers should tell consumers how location information will be used, and that consumers should be able to decide whether such information will be shared with others.

Mobile advertising in the U.S. is expected to grow to $6.5 billion by 2012--up from $878 million last year, with much of that revenue coming from text-message campaigns, according to a recent eMarketer report.