Internet marketing company Gator.com is a good example of how Internet marketing can quickly become an Internet mess. Gator offers free software to consumers. But when users download a tool, they also download Gator's OfferCompanion, an advertising program that tracks users on the Web and places ads for Gator's clients on competitors' Web sites. For instance, Gator users visiting 1-800-Flowers.com will sometimes see a pop-up ad from FTD.com.
The Internet Advertising Bureau, a nonprofit association of marketers that sets the general rules followed by Internet advertisers, last week asked the Federal Trade Commission to stop Gator's practice because it infringes on the copyright, trademark, and intellectual-property rights of Web publishers and advertisers. "They're doing a disservice to the advertising industry," says Robin Webster, president and CEO of the association.
Gator responded to the accusation with a lawsuit seeking a federal court declaration that the association's complaints are unfounded. CEO Jim McFadden says Gator is as entitled to space on a Web page as the publisher because Gator's software--like the content of the page--is free to users and supported through ad dollars. And, he says, the Gator ads appear after the publisher's ads, giving consumers a choice between two competing offers.
Claiming click-through rates up to 25% higher than those of regular banner ads, McFadden believes that his critics will soon become fans. The ethical issues surrounding Gator's tactics haven't kept 200 companies, including Expedia Inc. and Office Depot Inc., from using the service.
But for some companies, other issues are at stake. James Henderson, network engineer for the Washington Suburban Sanitary Commission, a water utility in Laurel, Md., says Gator has been causing Internet Explorer to crash on its employees' desktops, and removing the software sometimes takes hours. Scott Eagle, senior VP of marketing at Gator, says such problems are unusual. The Gator software often communicates with a client's servers during off-peak hours. That worries Ian Hiebert, IT manager and systems administrator at British Motor Car Distributors Ltd., who has noticed excessive network traffic during night hours from Gator-enabled PCs. "When you have this kind of activity, you're opening a back door that's a threat to my network," he says.
Ultimately, advertisers must weigh the pros and cons of using a service like Gator's. "There's an ethical responsibility for the advertisers," says Randy Covill, a senior retail analyst at AMR Research. "Even if what they're doing is fully legal, if it's perceived of as unethical, then it's poor business."