ftc-beyond-voice-2.jpgFive Year Old Case Studies, Babbling Activists, Sales Pitches and a Sneak Peek at What’s Coming Down the Regulatory Pipe.

Washington at its Worst?

By now many of you may have caught the occasional blurb / sound bite from this week’s Federal Trade Commission “Town Hall” on Mobile Marketing entitled “Beyond Voice: Mapping the Mobile Marketplace.” What you probably haven’t been exposed to is the unique combination of lunacy, tedium and righteous indignation that filled much of the event.

Luckily our hyperbureaucratic friends sought fit to publish complete online transcripts of the proceedings for those either unable or (more likely) unwilling to attend the two day event.

What’s this? You say you don’t have the time or the patients to read through the reams upon reams of “thoughts” relating to our industry’s regulatory future? Well fear not! Mobilestance.com has got you covered!

So sit back, relax, and learn of “The Shocking Truth” of what occurred at the FTC “Town Hall” on Mobile Marketing (part one in a special two part series).

May 6th
9:00 – 11:00 (AM EST)

Welcome and Introductory Remarks
Commissioner Jon Leibowitz, Federal Trade Commission

Content and Commentary

Jon Leibowitz, Commissioner of the Federal Trade Commission kicks things off with some levity in the form of a video clip featuring the world’s first mobile phone (“unveiled right here in Washington D.C. a few blocks away”, the clip is of Maxwell Smart’s famous “Shoe Phone”). From there he starts with familiar stats on mobile voice and data usage in the US, but then quickly transitions into the actual purpose of the “Town Hall” (we’ve put Town Hall in quotes because lets face it, if you’re going to have a “town hall” in the “township” of Washington, D.C., and its being run by a US Gov’t regulatory body… call it what it really is: A hearing).

Leibowitz runs down a short list of “a host of [mobile marketing] consumer protection challenges” (read: things he aims to regulate), setting the tone of the two day proceedings:

  • Disclosure issues. Do consumers understand what advertisers are selling and how much it costs? Mobile devices make disclosures even tougher. How can a marketer explain key terms and conditions on a screen the size of a small Post-It?
  • Mobile advertising itself. Recent surveys have found that most consumers are annoyed by it (What? Advertising is annoying? Alert the media!)
  • Spam. Unwanted and sometimes offensive content… Text Spam invades your time, your privacy and your wallet. (Agreed)
  • Location Based Services. The sense of big brother or ex-boyfriend knows where you are at any given moment really raises troubling issues about government access, physical safety and personal privacy.
  • Location Based Mobile Marketing. Does America really need cell phones with ads flashing like lights in time square, do we want our PDAs turning into turning into digital pocket bill board? Personally I worry about clutter. (Leibowitz is really pushing the envelope here… sure, these are presented as his personal opinions, but when presented in this context it gives the impression that the FTC is angling to regulate what is and isn’t “tasteful.” I appreciate the sentiment, but he should really keep his aesthetic concerns to himself. Does he somehow think FTC stands for “Federal Tastemaker Commission?)
  • The Kids. A mobile phone that gives them access makes them easy pray for aggressive marketers… and we need to consider whether additional protection for kids and children are warranted.

Then, to make sure everyone in the room doesn’t forget who’s in charge or what’s at stake in this so-called “town hall”, Leibowitz drops the widely-reported word bomb on the room: “We strongly believe, as many of you know, in self-regulation – but we are also going to police the wireless space.” Make no mistake… Leibowitz is on the beat, nightstick a-swingin! “Our agency has a long history of studying new technologies and the consumer protection and competition issues that are embedded within these new technologies,” He continued, “And we have a long history of working with our sister agency the FCC when consumer protection concerns arise in the Telecom context.” At this point you can almost smell the tension in the room. Finally, he takes it up a notch by pointing out what’s at stake: “You can take our example of our work with them on do-not-call on Spam.”

And there it is… he might as well have just said “We are your overlords, you private-sector pawns. Kneel before us and grovel at our regulatory feet. ” And grovel they did… for the next two days, in fact.

Session 1: The Mobile Marketplace — What, How, and Who
“This session will provide an introduction to the role of mobile commerce, beyond traditional voice service, in today’s society. This overview will include a discussion of demographics, consumer habits, and popular and anticipated uses of mobile services within the United States. It will also refer to developments in mobile commerce outside the United States.”

Participants

  • Evan Neufeld, VP & Senior Analyst, M:Metrics
  • Steve Smith, Media Critic, Mediapost and Access Intelligence

Moderator

  • Ruth Yodaiken, Staff Attorney, FTC Division of Marketing Practices

Content and Commentary

A whirlwind of stats, graphs, charts, definitions, et cetera on US habit and usage of mobile data services. Not a bad data set here (note: get your free research data in this section’s transcript, it’s a fairly comprehensive presentation). At the end of this session everyone is supposed to be comfortable with the alphabet soup of mobile terminology that will pervade the remainder of the talks. I suspect anyone not in the industry is trying their best to keep up… but finding these two a little manic in their rapid shifts from topic to topic.

Here’s a taste of the kind of language and topic jumping that was bound to throw the room: “Someone has a 3G phone for example is 1.4X likely to do social networking, 1.5X to browse, et cetera. Smart phones, similar. Though only 6.2% of the total US device market at this point, this is also another where you see tremendous increase in usage, with 4X and 3X for social networking browsing and music and video. Where this all ties in is the iPhone. Everybody talks about the iPhone. [I’m] not necessarily a huckster for apple per se. [In] my mind the iphone is an example of a phone with a good interface for browsing. Some say the secret is the interface, the URL doesn’t suck, there’s kind of what the standard is. So it’s less about the iPhone is the device and interfaces are catching up with consumers. When you do that the usage is tremendous.” No disrespect to Evan (whom I actually agree with on all of these points), but does anybody think that the room is getting all of this? I’d bet dollars to donuts that the good folks at the FTC aren’t among those nodding their heads.

Session 2: Mobile Messaging — Unsolicited, Premium, and Interactive Messaging
“This session will provide an overview of text/SMS (Short Message Service) and MMS (Multimedia Messaging Service) messaging, introduce innovations, and highlight billing concerns.” [Transcript]

Participants

  • Alykhan Govani, Head of BD, MX Telecom
  • William Haselden, Assistant Attorney General, State of Florida
  • Dorian Porter, CEO / Founder, Mozes, Inc.
  • Leigh Schachter, Senior Litigation Counsel, Verizon Wireless

Moderator

  • Lisa Hone, Assistant Director, FTC Division of Marketing Practices

Content and Commentary
A lot more talk educating the room on the consumer benefits of mobile marketing balanced with the need for responsible practices (opt-in only, full disclosure, yadda yadda). A lot of the recursive, meandering language that is familiar to anyone who has attended a panel session at CTIA in the last five years… a tactical example here (say, MMS blogging), a brand reference there (say, Papa John’s), a consumer confusion point tossed in (fear of spam, cost, or just not knowing what a short code is), a statistical reference followed by a rapid-fire strategy statement (e.g. “it’s all about the mobile context”) – and then just repeat with different phrases. Sorry if that comes across as a little cynical, but there’s only so much of this one person can be exposed to before the sarcasm kicks in. Mozes then goes into a txt2screen demo, and walks us through what could well be their sales presentation (wait, this is CTIA!).

Next up is William Haselden, the Florida Assistant Attorney General, who walks the room through some of the very worst examples of bait-and-switch, “free ringtone” (I mean, $9.99 per month) marketing. Make no mistake, the Florida Attorney General’s office has a well earned reputation for their willingness to prosecute consumer trade practice offenders – and he’s got the room’s attention. His examples of Florida’s idea of regulating the space are highly detailed, and many are quite reasonable… so (for example) that when people click on a box that says “nine ninety nine” that they know that they are paying “$9.99 per month,” etc. Some are extremely granular regulatory suggestions, right down to color contrast restrictions so that prices can’t be hidden in (nearly) the same color as the page background (but who is going to enforce all of this? Ah… a bigger budget for the Florida Attorney General’s office, perhaps?).

Leigh Schachter, Senior Litigation Counsel for Verizon Wireless, finishes off the session with a talk on unsolicited SMS messages. She opens with what was basically a fairly comprehensive 101 on “how to execute a spam SMS campaign,” including instructions on how one would send unsolicited sequential text messages to handsets via email gateways on a carrier by carrier basis. Kind of reminds me of the Tyrone Biggums Drug Awareness bit on Chappell. Everything a young spammer might need to get started… Kids, get out your pencils! Her comments on the lengths Verizon goes through to thwart these efforts are impressive (from filters to prosecution), but ultimately the audience is left with the sobering reality that this is an issue (like email spam) that just isn’t going away anytime soon. It’s a real credit to the carriers that most mobile users aren’t even aware that SMS spam is even an issue at all. Go get ’em, VZW!

May 6th
11:15 – 12:30 (PM EST)

Session 3: Mobile Applications — Games, Widgets, and More
“This session will offer a series of demonstrations about the many possibilities offered by modern mobile devices, which are barely recognizable from the cell phones of yesterday. Industry panelists will discuss how different mobile ecosystems open up the world of applications, from games to social networking.” [Transcript]

Participants

  • Steve Boom, SVP of Connected Life, Yahoo! Inc
  • Andrew Elliott, Director of Services and Software, North America Go-to-Market, Nokia
  • Thomas C. Ford, Global Market Strategist, Consumer Products, Opera Software
  • Rich Miner, General Manager of Mobile Platforms, Google Inc.

Moderator

  • Ruth Todaiken, Staff Attorney, FTC Division of Marketing Practices.

Content and Commentary

Review of the development and distribution challenges facing downloadable and web-based mobile applications. Differing device, OS standards, and of the carrier walled gardens. Standard Yahoo GO demos and the like, and Google’s preference for openness as the solution for many of these market barriers (including, appropriately, security – using the old “false sense of security that comes with high walls” argument that Microsoft has basically proved to the world with their closed – and thus highly insecure – Windows and Internet Explorer products). Well played, Google.

May 6th
1:45 – 3:00 (PM EST)

Session 4: Location-Based Services
“This session will offer a roundtable discussion of the emerging world of location-based services, through carrier-controlled environments or other mechanisms. This discussion will include reference to broadcasting commercial appeals and coupons to phones. There will be a discussion of disclosures about tracking and consumer control of information.” [Transcript]

Participants

  • Michael F. Altschul, SVP and General Counsel, CTIA
  • Tony Bernard, VP of Operations, Useful Networks
  • Alissa Cooper, Chief Computer Scientist, Center for Democracy and Technology
  • Tim Lordan, Executive Director, Internet Education Foundation
  • Fran Maier, Executive Director and President, TRUSTe

Moderators

  • Rick Quaresima, Assistant Director, FTC Division of Advertising Practices
  • Peder Magee, Senior Attorney, FTC Division of Privacy and Identity Protection

Content and Commentary

Overview of the state of the LBS market, GPS and WiFi triangulation techniques, and various approaches to E-911 compliance. The CTIA has provided a very comprehensive breakdown of each of the US carrier’s LBS service offerings followed by their recommendations for industry Best Practices (all in all quite a good read). You can download here (warning: .pdf link). Many of their best practices hinge on the fact that current statutes governing this area deem the account holder, rather than the actual user, the party with right to set LBS data sharing privileges (child safety comes up often). Other areas of concern touch on disclosure (they recommend a lot), the need for securing the consumer’s explicit permission (opt-in) prior to engaging in location based marketing (nothing shocking here) and length (if any) of data retention (what he cleverly refers to as the “first cousin of security”).

Next up is the Center for Democracy and Technology, “a 501C 3 non-profit public policy organization dedicated to promoting democratic values and protecting constitutional liberties on the open Internet, that includes the mobile Internet and other mobile media.” As a watchdog group for consumer privacy in the digital age (these guys are the behavioral targeting industry’s worst nightmare), the CDT has plenty to say about LBS, including proposing their own set of standards they’ve published under the rather alarmist moniker, “Who’s Watching You Now?” (warning: .pdf link). It seems that many of their arguments stretch the concept of the individual’s expectation of privacy to the limits of rational thought… that because people “walking down the street and by the coffee shop don’t necessarily expect an ad for a latte to pop up on their phone” somehow means location based ads are 100% inappropriate (sidebar: when will folks tire of the “walking by Starbucks and get an ad on your phone” example? Don’t these people understand that having your business on every other street corner pretty much negates the need for location based marketing in the first place!) . CDT then veers way off topic in a lengthy diatribe exploring the dangers of government access issues to location data. I say “off topic” because this is a “mobile marketplace” discussion, after all – not an open discussion of all things related to privacy. Does the CDT think that somehow the Government is going to purchase this data? Seriously, this kind of agenda mongering wastes everyone’s time, and does little to advance their cause.

Overall, issues of consent, recurring notification, “approved LBS services” (complete with a “seal of approval”), child safety, and “where to draw the line?” (zip code? 300 meters? 2 meters) dominate the discussion. If it wasn’t obvious before today, it’s clear by the length and number of questions from the audience that LBS lies at the heart of consumer privacy concerns as it relates to mobile. Nothing else comes remotely close.

 

May 6th
3:15 – 5:00 (PM EST)

Session 5: Mobile Advertising and Marketing – The Transition and Adaptation to Mobile Devices and the Small Screen
“This session will examine the general transition of advertising and marketing to mobile devices, discuss mobile-specific advertising campaigns, and address issues such as the targeting of advertising in the mobile space and strategies that advertisers use to adjust to small mobile screens.” [Transcript]

Participants

  • Jean Berberich, Digital Marketing Innovation Manager – Mobile, P&G
  • Jeff Chester, Executive Director, Center for Digital Democracy
  • Susan Duarte, Counsel for Marketing Practices, Sprint Nextel Corp
  • Jim Durrell, Director of Product Management, Greystripe
  • Gene Keenan, VP of Mobile Services, Isobar Global
  • Hairong Li, Associate Professor of Advertising, Michigan State University
  • Marci Troutman, Founder, Siteminis, Inc.

Moderators

  • Mary K. Engle, Associate Director, FTC Division of Advertising Practices
  • Jamie Trilling, Staff Attorney, FTC Division of Advertising Practices

Content and Commentary

The grand finale for day one sported an all-star panel that didn’t fail to disappoint. The session started with an examination of Asian markets as (presumably) a precursor for what we can expect here in the US in the next few years (yes, yes – we all know the flaws that model presents, but at least it presents a refreshingly optimistic future of the US mobile marketing space!). This followed by more research (winner of the “most bullish” award was an M:Metrics stat claiming that 98% of US 18 to 24-year-olds own a mobile phone, with 92% using SMS. While we all agree that 18-24 is the “sweet spot” in mobile here in the US, 98% and 92% are pretty big numbers. I believe that’s even higher than Cable TV’s reach in the same demo). Ogilvy is talking about their interactive Time’s Square billboard for Dove. That one never gets old. P&G is talking about their Cover Girl WAP site. Ditto.

Luckily the FTC thought ahead and brought in Jeff Chester from the Center for Digital Democracy to stir the pot a bit. He was certainly in his element up there, mixing it up with all those agency, network and advertiser-types (How dare they try to measure the millions and millions of dollars they spend on advertising every year?! For shame!). He starts off on relatively safe ground in raising non controversial issues of childhood obesity and advertising, but then quickly lapses into his war against all forms of data-driven marketing (hey Jeff, how would you like to pay $18 for a tube of toothpaste? Keep it up and you just might find out!). On a personal note, Bob Walczak has to be pleased that his “MoPhap” was listed among his usual suspects of “rogue marketers” (read: behavioral targeted ad networks). Too bad Jeff didn’t get the memo that as of several months ago MoPhap underwent a much needed rebranding effort and is now known as Ringleader Digital.

Like many of the day’s earlier activists, Jeff did himself a disservice by bringing unrelated matters into the conversation. Take this example: “We are at a point of — I think almost unprecedented anxiety in the American confidence we have problems related to the current mortgage crisis, certainly, and gas and oil prices have gone up, we don’t want to have a system, particularly tied to youth, that is running amuck because it’s tracking everything we’re doing encouraging this kind of impulse buying.” Somehow data-driven marketing tactics are related to the current crisis in the credit markets? I mean, I realize that everything is connected, you know, in the Daoist, George Harrison-type sense… but can we all agree that we don’t want our industry regs influenced by such obvious windmill-tilters?

Stay tune’d for the second half of this disturbing, yet deeply entertaining odyssey!

7 Responses to “The SHOCKING Truth Behind The FTC “Town Hall” on Mobile Marketing (Pt. I)”

  1. #1 Jeff Chester says:

    Neither the FTC, nor the mobile industry, have informed the U.S. public that the range of practices that have raised privacy concerns with online marketing have been migrated to the mobile environment (but now location is added). What CDD has initially found–and which it and the USPIRG will soon file at the FTC via an amended complaint to our behavioral targeting submission of November 2006–is very disturbing. Users deserve to know what data about their mobile behaviors is being collected, analyzed, and used. No such data should be collected without affirmative opt-in after reasonable disclosure. Special safeguards are required for children and adolescents as well (health and financial information also must be safeguarded). I am a big believer in the mobile market–it will become an essential way of living our lives very soon in the U.S.. We should structure the market to help preserve privacy, consumer autonomy, foster democratic expression and also promote the commercial sector. It just can’t be a one-way toll call on the go reflecting what some in the industry desire.

    This blog may mock what I said about impulse buying and the current financial crisis, but it appears to be a self-serving rejoinder to criticism about the larger societal issues. The mobile industry must show corporate responsibility related to data collection and targeting. By the way, Mophap still lists itself online:http://www.rulinkedup.com/~mophap/corpdev/about_overview.php

  2. #2 jamie wells says:

    Jeff,

    I appreciate your comments but in my view your position is entirely without merit. Collecting and analyzing data (whether anonymous or otherwise) on website visitor habits is not an “unreasonable search,” as site visitors understand that the “free content” they enjoy comes at a price, and that price is advertising – and in the digital age advertising is optimized by a variety targeting strategies. Users are free to consult with a site’s privacy policy if they wish to learn the specifics of these strategies, and can choose to “opt-out” by not visiting said site.

    In my view sites should not be required to “ask permission” before engaging in traffic analysis, anymore than grocery stores are required to “ask permission” to analyze purchase habits as logged on a “shopper loyalty” card. This is the price of admission, as clearly laid out to the consumer in the privacy policies and / or terms and conditions of both services.

    Respectfully, I suspect that your November 2006 behavioral targeting submission is also an entirely specious effort.

    As for MoPhap, I have no explanation as to why that page you cite is still live, but rest assured they have re-branded as Ringleader Digital. You can find the announcement here: http://www.alleyinsider.com/2008/2/mophap_becomes_ringleader_digital_raises_6_million.

    Thanks again for taking the time to leave a comment with us.

    Jamie

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