The FTC May Become Your Most Important Regulator

Recent reports indicate that the new Federal Trade Commission Chairman, Jon Leibowitz wants to rein in the practice of delivering internet based ads to individuals keyed to their Web search activity.¹ Leibowitz has experience in the area, having been the FTC Commissioner credited with a similar crack down on spyware that surreptitiously gathers information on Web users' surfing habits.

On the surface this development would seem to have little to do with broadcasters. But in fact, as broadcasters adapt to interactive technologies in increasing numbers, it is demonstrates the nature of regulatory actions to which they will have to pay increasing attention. It's is possible that should broadcasting evolve into an amalgam of radio and Internet-based content delivery, the FTC, rather than the FCC, will be the most important regulatory agency to the broadcasting industry.

In a recent interview with BusinessWeek, Leibowitz said, "There's a critical issue about whether consumers have notice of what companies are doing with their information and whether they're making informed choices about [sharing] information."

That's important, because the effectiveness of web-based advertising is largely based on the ability to gather information about a consumer and send him or her advertising targeted to their immediate purchasing needs -- information gleaned from their web behavior.

As broadcasters improvise by developing websites to be a central community resources and use the radio station to drive listeners to their websites, these FTC issues will play a role of increasing importance. It is increasingly hard to ignore the opinion of many advertisers that interactive advertising is their most effective advertising dollar. A recent study from Forrester Research concludes that:

1. In this recession, marketers have learned that interactive marketing is more effective, and advertising less effective, per dollar spent.
2. While budgets for online advertising have decreased, they decreased less than other budgets.
3. Six out of 10 marketers surveyed agreed with the statement, "We will increase budget for interactive by shifting money away from traditional marketing."

Studies like this support those broadcasters who have begun to develop their ability to deliver online advertising and combine it with over-the-air messages that push listeners and viewers to their website as the local resource and search engine of choice. To be effective, broadcasters will need to marry their products with the information mining resources of companies like comScore to deliver the user metrics making targeted advertising possible.

ComScore ... and companies like it ... quantify branding effectiveness by measuring lift in awareness, message recall, intent-to-purchase and changes in consumer attitudes by analyzing online behavior with insights, collected from comScore panel user panels. According to Business Week, behavioral targeting has become more prevalent as it gets easier and cheaper to use and is demonstrated to induce a customer purchase decisions.

Regulation in that area, however, is the province of the FTC, and true to Chairman Leibowitz's lead, they are becoming active in the area. For example, the FTC has worked with the online industry to fashion draft advertising guidelines, which will apply to broadcasters websites and searches conducted from a station's search engine as well.

As broadcasters realize their own ability to use their resources to make this adaptation, there is another transition that may occur. The FTC may replace the FCC as the most important regulator in their lives.

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¹ Business Week Internet August 2, 2009, http://www.businessweek.com/technology/content/aug2009/tc2009082_486167.htm

ComScore ... and companies like it ... quantify branding effectiveness by measuring lift in awareness, message recall, intent-to-purchase and changes in consumer attitudes by analyzing online behavior with insights, collected from comScore panel user panels. According to Business Week, behavioral targeting has become more prevalent as it gets easier and cheaper to use and is demonstrated to induce a customer purchase decisions.

Regulation in that area, however, is the province of the FTC, and true to Chairman Leibowitz's lead, they are becoming active in the area. For example, the FTC has worked with the online industry to fashion draft advertising guidelines, which will apply to broadcasters websites and searches conducted from a station's search engine as well.

As broadcasters realize their own ability to use their resources to make this adaptation, there is another transition that may occur. The FTC may replace the FCC as the most important regulator in their lives.

This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.