Web Ad Explosion

Informed Consent?

We shouldn't have been surprised. The software's user agreement outlined the various changes that would be made to our system. But not everyone reads such agreements carefully. And at least one site distributing the software, PornLabs.com, advised Webmasters to rename the download as "mp3_finder.exe" or "napster2.exe" in order to "help induce the surfers to run and accept the software."

PC World tried to contact the owners of PornLabs.com, who are listed with the Web domain name registrar VeriSign as Toiling Robots, but could not reach them. C2 Media founder and coprincipal Alex Shamash says he knows nothing about Toiling Robots. As for the downloads, he says, "Everybody knowingly accepts the terms of the software." And C2 Media is just one of many companies that make money by generating ad "impressions"--an industry term used to refer to the number of times an ad is displayed--and the resulting traffic to customer sites.

How do ads from big companies such as Citibank and Ford wind up on tiny Web sites? Corporations or their agencies often place a certain percentage of ads through middlemen such as Advertising.com, ClickXchange, or Commission Junction. Such middlemen may, in turn, route the ads to hundreds or thousands of affiliated sites. ClickXchange, for example, has some 150,000 affiliates that run banner ads for 460 advertisers, according to Craig Tammel, chief technology officer. And each day hundreds more sites inquire about joining the program.

Given these numbers, it can be impractical or even impossible for a middleman to police every affiliate. For example, General Counsel and Vice President Tom McMahon at Advertising.com said he was not aware of the details of how C2 Media generated ad impressions when he was first contacted by a PC World reporter, although C2 Media was an affiliate at the time. The two companies have since ended their relationship.

Agencies and companies also place ads through brokers who buy and resell bulk inventory of online ads for a small profit, says Lattin. In these transactions, he adds, it's possible to lose control over exactly where an ad is placed--explaining how a mainstream ad can end up on a porn site even if the sponsor forbids marketing on such sites. "Half the companies [advertising with these sites] may not even know it," he says.

A Potential for Huge Profits

The affiliates who distribute these advertisements can earn substantial cash, as demonstrated by a recent federal court case in Philadelphia. A judge ordered Web marketer John Zuccarini to pay back $1.8 million in "ill-gotten gains" from tricking people to view banner ads and visit Web sites run by pornographers and a self-styled psychic named Miss Cleo. Unfortunately, Zuccarini vanished without paying, and is still being sought by Federal Trade Commission investigators.