Yahoo ad exchange offers 'deceptive' ads

Deceptive advertising may be illegal in the U.S., but Yahoo's ad exchange appears to offer it to publishers on a menu of choices when they're deciding what ads to run on their Web sites.

Yahoo Right Media's Direct Media Exchange gives publishers the option of running or blocking several different types of ads, based on their "deceptiveness."

These ads include graphical advertisements that are designed to look like fake error or download messages or look like genuine Windows dialog boxes. Also included are ads that have phony "close window" buttons or pull-down menus that actually take the user to a Web site instead of closing the window or producing a pull-down menu. Direct Media Exchange also categorizes deceptive ads by language, letting publishers filter out "deceptive or questionably realistic offers," or "free" offers that do not disclose what a consumer might have to do to qualify for this free offer, according to the company's Web site.

According to data on the Direct Media Exchange Web site, viewed by the IDG News Service, these "Free with no disclosure language" ads can make up close to 18 percent of Right Media's ad inventory at certain times.

Advertisers like these types of ads because they are effective. Last month, researchers at North Carolina State University found that computer users have a hard time distinguishing between fake Windows warning messages and the real thing. In an experiment that tested the responses of 42 Web-browsing university students, they found that almost two-thirds of them would click "OK" whenever they saw a popup warning, whether it was fake or not.

Right Media argues that it is simply a technology offering, designed to create an open marketplace for advertisers and publishers. "The Exchange doesn't make a judgment on that type of ad category," said Yahoo spokeswoman Kristen Wareham, via e-mail. "It's up to the publisher to select the type of ad that works on their page."

Yahoo should refuse to run deceptive ads, said Ben Edelman, an assistant professor at the Harvard Business School who studies Internet marketing practices. "It's hard to defend these ads' tactics. They intend to deceive, and by all indications they succeed," he said. "They have no proper place in Yahoo's ad network."

Yahoo bought Right Media for about US$700 million last year, looking to strengthen its position in its fight with Google for online advertising dollars. The exchange provides a marketplace for Web publishers who have been unable to fill all of their advertising spots, allowing unused ad inventory to be sold at auction to advertisers.

Government officials charged with enforcing deceptive advertising say that while the ads on Direct Media Exchange ads may be dubious, they may not be bad enough to warrant an enforcement action.

"Any type of advertisement that is likely to deceive consumers acting reasonably under the circumstances could be deceptive," said Rick Quaresima, an assistant director in the U.S. Federal Trade Commission's Division of Advertising Practices.

But the FTC looks at individual ads on a case-by-case basis, he said. And while ads that trick a consumer into visiting a Web site may be annoying, the ones that deceive in order to sell a bogus or harmful product such as malicious antispyware software are a top concern. "We're certainly more concerned with the cases of deceptive advertising that could cause tangible consumer harm or consumer injury. that would be where we would prioritize our enforcement efforts."

These deceptive ads present a dilemma for Right Media, said Washington State Assistant Attorney General Katherine Tassi.

On one hand, Right Media is providing a service to publishers by giving them a way to exclude these ads, on the other, the services do expose "Right Media to some liability for essentially facilitating the transmission of deceptive advertisements," she said.

If Right Media simply dropped this type of filtering, it could make things worse for consumers by inadvertently encouraging unscrupulous advertisers to sneak their deceptive ads into the marketplace.

And enforcement agencies like the Washington State Attorney General are unlikely to hold ad networks, rather than advertisers themselves, accountable for deceptive ads, Tassi said.

One Web publisher said that while he thought that deceptive ads should be banned outright, he appreciated what Right Media is trying to do. "They are very forward when it comes to the kind of filters they allow you to use," said Sanford Liu, director of Interactive with Supernova.com, a music community Web site. "This is something that most other sites do not have."

Correction

This story has been changed to more accurately describe Yahoo's Right Media division. Right Media is best described as Yahoo's ad exchange. The headline and first, seventh, and eighth paragraphs have been corrected.

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