IAB To Wrestle Gator.com over Alternative Online Ads

Does an online shopping companion service have the right to substitute ads of its own choosing for the ads that other Web sites expect users to see? Welcome to the latest Internet advertising riddle.

Tuesday, the Interactive Advertising Bureau (IAB) said that it intends to “immediately pursue options” with U.S. agencies over allegations that Internet software maker Gator.com is subverting paid-for online advertisements with alternative ads.

Firing the latest salvo in the battle to protect prime online advertising real estate, the IAB said that Gator has “substantially infringed” on the trademark, copyright and intellectual property rights of its members.

The wrangling over Gator’s tactics began with the its launch last week of its “Companion Popup Banner” ad-delivery software. According to the IAB, the software displays alternative pop-up advertisements on top of paid banner ads of the same dimension — without the consent of Web sites or third-party advertisers — concealing the existing ad entirely.

Aid or Hindrance

Approximately 8 million users have installed the software, which Redwood City, California-based Gator maintains is simply a “behavioral marketing engine” that can “inject relevance and effectiveness into all types of online advertising, including the beleaguered banner ad.”

Gator, which tracks user online activity, said it targets its advertisements based upon its measurement of sites that customers have recently visited.

However, the IAB charges that the service “results in the deception of consumers and advertisers and interferes with the valid contractual relationships between Web publishers and their advertisers.”

Something for Nothing

“Consumers who choose to use the Gator.com software for various services may not be aware that in return for these services, they are allowing Gator.com to cover up advertising sold by the Web site with advertising sold by Gator.com,” IAB president and chief executive officer Robin Webster said.

“The consumer has not replaced the advertising by him or herself,” Webster added. “Gator.com has done it, and is thus presenting a false and misleading business relationship between the sites and the substituted advertisers. Additionally, they are combining sites’ copyrighted content with advertising, which may not meet the quality and content requirements of particular sites.”

As a result, Webster said, the software “illegally interferes with valid contractual business relationships.”

Rallying Support

The IAB — which counts such industry heavyweights as MSN, DoubleClick and Yahoo! among its members — said it is currently in discussion with other interactive advertising industry organizations in urging governmental agencies to investigate Gator’s alleged misleading business practices.

However, IAB spokesperson Stu Ginsburg told the E-Commerce Times that IAB is “not prepared to answer” whether the group has already begun lobbying agencies such as the U.S. Federal Trade Commission (FTC) on the matter.

FTC representative Claudia Bourne Farrell also told the E-Commerce Times that she does not know whether the IAB has lodged a complaint against Gator with the agency.

Ready and Willing

Said Ginsburg: “We intend to move fairly quickly on this. Our options are limited since we are a trade association and we don’t have the standing to bring a lawsuit.”

However, Ginsburg noted that an IAB member could file a suit against the software company.

“If and when that happens, we will be there to support our members,” he said. “All options are on the table.”

Model Behavior?

Although Gator representatives were not immediately available for comment on the IAB’s latest charges, the company attempted to head off criticism with its statement announcing the launch of its pop-up ad service, rejecting charges that it poached other sites’ advertising.

“Web site publishers secure their permission to display advertising when consumers elect to view the free content,” the company said. “Similarly, as a software publisher, Gator secured its permission to display advertising to its users when they elected to install the company’s free software.”

Gator maintained that its marketing vehicle is legal, stating that it “views both Web site publishers and software publishers as invited guests on the user’s computer screen.”

Options Available

Gator added that its users can also set a time-delay triggering when the pop-up will open, alter the banner window’s location, or close the banner window entirely.

“While I appreciate that sometimes one company’s groundbreaking innovation can be another company’s controversial tactic, it seems clear to me that, in due time, the industry will embrace relevance as a model that works for advertisers and consumers,” said Gator CEO Jeff McFadden.

Too Little, Too Late

The IAB critics, however, are not convinced by Gator’s arguments.

“In effect, Gator.com is falsely implying relationships that do not exist,” said Webster.

“Publishers and advertisers who have chosen to be associated with one another are having those relationships damaged and are suffering grave financial harm by losing business opportunities,” Webster added. “Consumers are similarly being deceived by the company and are being denied the full experience of the Web sites as intended by the publishers.”