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Adware Self Regulation- Not The Answer

by Wayne Porter

Preface: The purpose of the Performance Marketing Summit was to bring together delegates from the publishing community, major affiliate networks, adware vendors and merchants in order to promote dialogue between parties and to work on general rules of engagement. It is self-evident that technology has moved far faster than what human business systems can assimilate and cope with.

The summit focused namely on the problems of copyright infringement, trade inteference via the "over-writing" of affilate links, and issues surrounding bundling, EULAs, and user consent. After the public discussions the major network vendors, attended by this author, went into a closed-door session to work on collaborative policy.

The final results of this meeting was a joint Code of Conduct that was issued after a series of phone meetings among major vendors. Linkshare choose not to participate in the Code of Conduct opting for an Addendum to their legal agreements with adware vendors. Given that the FTC has asked anti-spyware vendors and technology leaders to work on a set of best practices as a first step towards controlling the problem of adware and spyware we feel this is only one small battle in what needs to be a multi-pronged attack. An attack that must involve legislation, technological response, consumer education, and perhaps even litigation to punish gross offenders.

While this meeting was an important first step in calling public attention to the problems of adware and spyware and its effects on e-comerce this author feels the industry has a long way to go in terms of coping with the problem. While positive strides have been made perhaps it comes down to the age-old case of the fox guarding the chicken coop. As long as money is changing hands it is hard for anyone to "self regulate".?The problems continue and and perhaps a Summit II is in order.

Summit Moderator: Wayne Porter
Summit Minutes: Jeff Molander

Network Participants:
BeFree/CJ ValueClick
Performics.com
Linkshare.com

Meeting Minutes - Performance Marketing Summit, November 7, 2002

9:00 AM Wayne Porter called the meeting to order and made opening comments, welcoming the group to NYC, noting that it is always good to get together in person rather than virtually.?Wayne Porter stated that the overall goal of the meeting is to promote dialogue and give a broad perspective of views on an emotionally charged view.

Wayne Porter quickly presented ground rules for speaking, housekeeping requests and encouraged professional, non-emotional dialogue.

9:05 Elisabeth Archambault Buckworks: Elisabeth A. commented that many affiliates feel abused and betrayed - directing their concern with networks and merchants. Elisabeth A. broadly defined what the group (affiliates she is representing today) considers to be problematic tactics that "parasitic software" package use.? (* reference: submitted text Elisabeth A.) claimed that the parasitic software tools anger and steal from affiliates like her - using her hard work to ultimately steal commissions from her and others like her. Elisabeth A. stated that the networks are facilitating - allowing - the parasitic software tools to exist and pointed to network fees as the reason that networks approve of and support the parasites.

Elisabeth A. commented that affiliates do not really know how much commissions are diverted from their efforts (by parasites). Elisabeth A. compared affiliates to a company's salesman/woman and drew tangents to the affiliate community - taking it further by stating that sales people that steal "real world" commissions would be fired and held criminally responsible?. Prosecuted.

Elisabeth A. asked networks "why have you waited so long?" and pointed out the CJ supports parasitic affiliates on multiple levels. Elisabeth A. commented that, as a result of their negligence the networks are squandering talent and driving affiliates away from the affiliate networks - seeking relationships outside the networks Elisabeth A. claimed to be experiencing a "crisis of trust" with Commission Junction and pointed out that networks, also, have a hard time measuring the lost revenue to affiliates - yet it is real

Elisabeth A. pointed out that a user's system performance suffers from the parasitic solutions (PC's) and frustrates consumers - threatening brands of the networks Elisabeth A. mentioned that ad blocking software is out of the scope but problematic as well

Elisabeth A. mentioned that shopping toolbars are also problematic - to affiliates, networks and consumers and pointed out that so called CRM solutions are problematic as they interfere with the customer relationship

Elisabeth A. asked that networks stop rewarding companies that divert commissions and cause harm and that they notify merchants when they detect such activities

Elisabeth A. made a call for rules and enforcement and quoted Dr. Ralph Wilson on the issue Elisabeth A. summarized her comments and asked that the networks work harder to help and keep things balanced and fair

9:25 Keith Kotchberg, When U: Keith K. quickly introduced himself and commented that it's rather unprofessional to call out specific companies (who are in the room) as parasites or un-ethical

9:26 Keith K. commented that 20MM users are active on WhenU and 40MM have uninstalled the application and indicated that it's very simple - based on these numbers - for a consumer to uninstall if they desire

Keith K. commented that the company's software has never replaced an affiliate link belonging to another affiliate

Keith K. indicated that all downloadable application providers need to manage churn and claimed that presenting a consumer one ad per day (in the case of WhenU) is not problematic to smaller affiliates

Keith K. mentioned that Elisabeth A's comments re: the networks, application providers and ASP's are legitimate, ethical businesses Keith K. pointed at AdAware as a product that consumers can use to uninstall software that they wish to remove from their PC's? ad-based software Keith K. accused some affiliates of spamming

Keith K. claimed that merely 20-30 merchants are actively promoted per month (approximately) via When U's solution Keith K. opened it up to questions;

Connie Berg commented/questioned that Keith's comments regarding uninstalls of WhenU - their data - reflected desired un-installed, not actual, successful un-installs A member of the audience inquired as to what a consumer needs to do so as to have WhenU pop up and

Keith K. commented on the various user "triggers" that may occur A member of the audience asked for Keith to clarify if he was suggesting that WhenU is small, that they are irrelevant to the parasiteware issue

The audience member accused Keith K./WhenU of waffling on who they are and what they represent to the community; Keith defended his initial position Audience members asked for Keith to speak to other parasitic companies but Keith K. declined to comment on behalf of others

An audience member asked if a consumer NEEDS AdAware; Keith commented that this is not needed to un-install WhenU but other software tools may not be as easy to uninstall - he is only speaking to WhenU

Audience member asked if WhenU was a part of other programs (bundled downloads) and Keith K. said that it is usually is bundled? a good number come from bundled downloads

Audience member asked if a monthly fee is paid by consumer in a bundle scenario and Keith answered no, not if free product Audience member asked for revenue data for WhenU and Keith K. declined to comment Audience member asked if a merchant can opt out of WhenU; Keith K. commented that he will not work with a merchant rather than spend a lot of time customizing the relationship

Audience member Elaine Rubin asked if merchants are all aware that they work with WhenU? if they, in fact, do and Keith K. answered affirmatively

Elaine R. asked if there is a public list available - of WhenU merchants and Keith K. was unable to answer this question at the moment Keith K. claimed that they terminate merchants if they are not behaving ethically or within their guidelines and denied that WhenU engages in any kind of business practices that are questionable and an audience member commented that he felt that WhenU was "above board" from his perspective - relative to some other so-called parasite applications

Wayne Porter asked that comments be kept to questions during Q&A portion of the speakers presentation and announced a short break

9:46 Wayne Porter called the meeting back to order and introduced the next two speakers, mentioning that agenda is loose; Wayne asked that the audience refrain from making emotionally charged comments and interjections

10:05 Paul Nichols Ebates.com

Paul Nichols of eBates greeted the crowd and referenced their position paper that he created (the paper* was passed out to the audience) Paul N. pointed out that we are not hearing the voice of the consumer today and pointed out that they seem to love their "Moe Money Maker" tool Paul pointed out that reaching the ultimate goal (harmonious existence) requires presentation of all views (* reference: submitted text)

Paul presented a quick history of eBates and their model; pointing out that loyalty shifted, a while ago, to the affiliate - not only the merchants Paul commented that things are changing and downloads are here to stay; they are not evil and suggested that the industry needs to work toward harmonious working relationships

Paul referenced the NY Times article recently and claimed that those losing huge amounts of money are not truly doing so - referencing the "less than one tenth of one percent" in the article Paul stated that eBates is aware of the concerns of smaller affiliates. Paul explained what (Moe Money Maker) MMM is and why it does what it does? how it does what it does? and why it is handy for consumers; helpful for eBates from a customer service perspective Paul claimed that eBates is driven primarily by what consumers/members want? making it easy.

Paul claimed that once the affiliate community raised the issue of re-directing affiliate commissions, they moved to eliminate this feature Currently, new downloads have the re-direction feature turned "off"; eBates is making move to upgrade existing MMM tools (that are already installed in future)

Paul expressed his frustration and said it was "sad" that smaller affiliates used tactics that were unprofessional to attack eBates (rather than calling him to talk it though and get the facts) Paul asked a rhetorical question "shouldn't the consumer be empowered to shop the way they want to shop?"

Paul claimed that MMM gives consumers tremendous flexibility and consumers are aware of its use at all times Paul claimed that consumers are always aware of installation of the MMM Paul pointed out that the characteristics made by others - describing "parasiteware" - are distinctly different than the eBates MMM

Elisabeth A. interjected / clarified her definition of "parasiteware"

Connie Berg commented that downloadable apps are not all the same? that all should not be lumped into an "unethical" category; she pointed out that the auto-redirect was her major concern

Paul N. commented that this has been fixed on MMM Connie Berg asked why, if MMM is such a small money maker as Paul claims, why did Paul "fight to the death" for it Paul responded by stating that it remains important to the company, although a small revenue generator

Tim Storm questioned the value add to merchants if they made the purchase without the MMM? while merchants are paying for clicks concurrently

Paul commented that some merchants have left eBates based on MMM functionality?

An audience member commented regarding the new functionality of MMM

10:28 Henri Asseily Bizrate.com: Henri Asseily of BizRate.com welcomed business and technology questions at the end of his talk

?Henri commented that "SLO's" Stand Alone Link Originator can be used to separate out parasiteware from legitimate downloadable apps Henri pointed out all of the players in the industry Henri presented an overview of his comments and gave a history of the affiliate/CPA industry Henri stated that, often times, the parasite device may Intercept walk in, CPC and CPA transactions Henri outlined what the called "the money trail" and discussed merchants profit margins?. Dissecting it and discussed all pieces of the cost pie (for the merchants)

Henri pointed out that the problem can be tied to the money trail? for Bizrate and others, the issue is tied to parasites taking money away from merchant's profit margin Henri presented a Bizrate case study relating to a parasite software tool - using eCPC as a guideline to measuring revenue for his company; as merchant traffic drops, sales begin to lower An audience member asked if Bizrate has a feel for revenue lost on parasiteware apps - specific to Bizrate's business Henri stated that he doesn't have latest numbers but promised to publish at the Bizrate.com site soon

An audience member commented on his experience with percentage diverted and Wayne Porter asked that comments be held for after the meeting; focus on questions Henri reiterated how the money trail works in his experience and its impact on the merchant? based on a case study scenario Henri stated that this problem will cause merchants to drop affiliate programs (in the future) and pure CPC options will be explored (budget dollars will shift) by merchants - threatening the networks Henri stated that they don't wish to be a pure CPC partner/affiliate Wayne Porter announced the break

10:48 Wayne Porter called the meeting to order and reiterated house rules

11:03 Shawn Collins AffiliateManager.net: ?Shawn Collins introduced himself and gave background on his experience in the industry Shawn reviewed the main points of his presentation: Credit the affiliate in all cases, affiliate profiles (importance of), educational effort needed by networks - to affiliates, distribution partners

A merchant from the audience (Blair.com) commented on customer acquisition vs. retention goal conflicts Shawn C. commented that the networks would be well served to categorize merchants more rigidly and gave examples of actual categories An audience member began to comment and ask questions relating to disclosure of adware relationships that merchants maintain;

Wayne Porter asked that this peripheral issue be discussed in another venue Shawn moved on to distribution models of downloadable applications and suggested that the networks create rules and guidelines to monitor and keep distribution on the up and up Shawn C.?commented on children and young adult (e.g. music file sharing apps) downloading applications and also downloading adware at the same time - unknowingly Shawn C. commented that "forced installs" in general are not desirable for consumers Shawn C. commented that diversion of commissions are problematic for loyalty shopping affiliates in terms of rewards to consumers being tracked properly Shawn C. commented on the need for simple, honest un-install rules

Shawn C. recognized that not all applications are difficult to un-install, yet some are problematic Shawn C.?made the resources of?IAFMA available for collaborating with affiliate solution providers - in the development of guidelines Shawn C.?gave examples of wording for such guidelines and, in fact, rules with enforceable teeth Shawn C.?opened it up for questions and Paul Nichols inquired if Shawn's guidelines are available on the Internet, publicly, anywhere; they are not.

Audience member Keith K. asked is user choice important in this and Shawn responded affirmatively Paul N. of eBates asked why distribution is tied to ethics Shawn suggested that a consumer should not need to be surprised to have a downloadable app installed?

11:26 Wayne Porter quickly introduced Joe from Wurld Media??

Joe Hatch, WurldMedia: Joe quickly introduced himself and commented that we (the industry) are at a "strategic inflection point" - a la Andy Grove of Intel He commented that "chaos reigns" early on in the process that Grove describes in his book Joe commented that a technology should not be utilized to eliminate the ability of other technologies to compete (or in this case affiliates) Joe presented background on Wurld Media and answered a quick question re: over-writing of links; Joe claimed that since May 2002 their solution did not engage in overwriting of affiliate links Joe went on to describe the BuyersPort platform and goal - wide consumer acceptance and reach for merchants Joe commented that financial institutions were their targets - to roll out Buyer sport; giving them access to tens of millions of customers; he related the events of 9/11 softened the financial services market and caused them to shift to online only sites ("pure play") customers - e.g. peer-to-peer application providers.

?It became apparent to Joe and his company that instant messaging and peer-to-peer were clearly a needy market - in need of their Buyer sport platform Customer retention was goal for p2p app providers - via Buyer sport platform Joe commented that there was an immediate outcry from publishers due to claims of over-writing of affiliate/publisher links Joe stated that some detractors even made death threats against management and/or called merchants to express outrage that they were working with BuyersPort according to Joe In May 2002 they took steps to modify technology ; this was done through the involvement of others The Link share addendum was appealing to BuyersPort - the rules were fair and therefore, earlier this year, they agreed to the terms.

A question from the audience was presented - why did the company (Buyer sport) start off by overwriting links and Joe commented that this was largely due to their own ignorance and that there is an on-going battle to own the customer (competition is fierce)

A question from the audience (from Bizrate) was directed at Joe relating to how Buyer sport makes money? relating to the exact, technical operational nature of how Buyer sport works - what it does to capture commission A question from Bizrate relating to "who wins" a battle between downloadable apps (e.g. Bizrate or Morpheus Rewards)

?Debate ensued with a comment being made by an audience member that "it's the consumer's choice"; the debate centered on covert deployment (bundled distribution) of the Buyer sport app and other such apps; also, Joe commented that in this particular case, eBates wins - today in a "battle of the bots" where both affiliate apps may run into each other

Question from audience: If linking convention changes, what happens? (this question was posed to BeFree)

Wayne Porter introduced Tim Storm of FatWallet

11:47 Tim Storm Fat Wallet

Tim likened Asian Pachinko machines to the state of the industry - relating to last minute interception of links just before they pay off Tim commented that this is a merchant decision and asked, "what will they allow?" If merchant wishes for interception to occur this is their choice. Tim commented that the consumer also has a choice with the downloadable apps Tim pointed out that networks need to educate merchants as to what exactly is going on in the industry - especially related to this issue Tim believes that downloadable apps are part of the future - and will not be going away? Tim referenced WhenU's 8MM ad opportunities a day - a quarter billion per month; WhenU validated this.

Wayne Porter inquired as to why Tim Storm / FatWallet is moving into downloadable applications as well

Tim's response: Situational awareness? he sees what others are doing and feels the need to compete; for him to ignore this would be irresponsible, he stated (to his family and employees) Tim suggested that each merchant will have a different attitude about downloadable apps.

A short discussion ensued (among the group members) re: decision of who will work with who - merchants and affiliates? Various audience members asked questions relating to points of clarification and relating to merchants disclosing who they are working or not working with

12:07 PM Wayne Porter solicited various questions that affiliates wish to have directed to network solution providers - for their consideration this afternoon.

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