EVERYONE hates digital ads. Yet the ads pay for the free apps that people love to download. Small wonder that crafty firms are slipping them into unexpected places. And that is why, on July 12th, America’s Department of Commerce will hold a public meeting in Washington, DC, to discuss this and other aspects of mobile privacy.
As smartphones and tablets capture ever more eyeballs, digital-ad firms such as AdMob, for which Google paid $750m in 2010, are hot. Not all have flourished: on July 2nd Microsoft took a $6.2 billion accounting charge, most of which reflected a writedown of the value of aQuantive, which it bought in 2007 for $6.3 billion. But the sector is now prominent enough to attract scrutiny.
Lookout, a mobile-security company, has analysed Google’s Android ecosystem and spotlighted ten ad providers, including Moolah Media (which did not respond to requests for comment) and LeadBolt, that use one or more monetisation strategies it considers “aggressive”. These include making ads appear outside apps (for instance, in the notification bar usually reserved for a person’s text messages); altering mobile desktops and browsers so that, among other things, new icons appear that display ads when they are clicked on; and gaining access to personal information without giving a clear warning.
Such practices can confuse and unnerve phone owners, says John Hering, Lookout’s boss. The firm reckons apps using the networks on its list have already been downloaded at least 80m times in the Google Play app marketplace alone. They are common in apps that let people customise their phones with digital wallpaper and other stuff, and in simple games (see chart).
Richard Harris, the boss of Moonbeam Development, an American firm with about 200 published apps, says his company started using LeadBolt about a year ago. At first it went well, but when ads were pushed into people’s notification bars and onto phones’ desktops, users grew angry. Mr Harris says the company even received death threats.
Dale Carr, the boss of LeadBolt, which is headquartered in Australia, says his company takes privacy seriously, and that it does not dictate to developers which ad units to choose from the range it offers. He also says LeadBolt lets people opt out of receiving ads sent to notification bars and desktops, though they need to go to its website to do so.
LeadBolt is working with academics and officials in Australia to define a self-regulatory framework for mobile advertising. But next week’s discussions in America are crucial to any firm with a global reach. These will be a test of the Obama administration’s commitment to protecting privacy, says Jeff Chester of the Centre for Digital Democracy. He speculates that the government is counting on Google and Apple to twist arms in the ad world. Apple already has a reputation for cracking down on apps that use controversial ad formats, so it could be a willing ally.
“Mobile is the wild West,” says Ran Avidan, the co-founder of Startapp, a mobile-ad network based in Israel that is also on Lookout’s list. Startapp is striving to make its own policies clearer, but Mr Avidan is worried that governments may end up dictating rules for the industry.
To avoid that, mobile-ad firms will have to act fast. App privacy policies should spell out what information ad networks are collecting and why. Firms should adopt an opt-in approach to the collection of personal data, such as phone numbers and e-mail addresses. And they should avoid collecting things such as unique phone identification numbers in ways that can be traced back to specific individuals. If they can stick to such principles, it would be a great advert for self-regulation.
From the Economist, published under licence. The original article can be found on www.economist.com