As we’ve discussed in a previous post, the United States lacks a comprehensive federal privacy law regulating the collection, storage, use and disclosure of personal information in the online context and lawmakers have introduced several new initiatives in an attempt to address the issue.  However, under COPPA, one of the few existing federal laws that deals with online privacy, the FTC has been flexing its muscles by regulating online (i.e., website-based), and with this case, mobile (i.e., app-based), privacy.

According to the FTC, several of W3’s apps are directed at children under the age of 13, including the popular “Emily’s Girl World”, “Emily’s Dress Up”, “Emily’s Dress UP & Shop” and “Emily’s Runway High Fashion”.  These apps encourage, but do not require, users to post comments (which could include personal information) to the Emily’s Girl World blog and to directly email their comments to “Emily”.  The FTC’s complaint states that, “in addition to the collection and maintenance of over 30,000 emails, containing email addresses, [the company has] collected, maintained, and/or disclosed personal information from over 300 Emily’s Girl World app users and 290 Emily’s Dress Up app users who have registered to submit comments.” Specifically, the FTC alleges that W3 failed to: (a) maintain or link to an online notice of its information collection, use and disclosure practices; (b) provide direct notice to parents of their practices regarding the collection, use, and/or disclosure of children’s personal information; and (c) obtain verifiable consent from parents prior to collecting, using or disclosing such information, all in violation of COPPA.

In response to the FTC action, W3 stated that its “sole purpose in collecting email data was to improve the user experience with [its] apps; we never used any email address for marketing purposes or sold it to other firms”.  The company appears to have taken immediate corrective action after receiving notice from the FTC and implemented “a strict email policy that removes any possibility of collecting and retaining email addresses, even unintentionally, from users under the age of 13”.  As part of the settlement, W3 has also agreed to delete all the personal information previously collected from children and to refrain from future violations of COPPA.

This is the second federal enforcement action made public this year over a COPPA violation which suggests that the FTC may continue to aggressively pursue privacy violations involving children.  Playdom, a Disney Enterprises subsidiary, is the first website/app developer to settle with the FTC this year over COPPA violations.  The company operates virtual world websites where users, many of whom are Children, are required to provide ages and email addresses in order to register to play online games.  They are also allowed to post their full names, email addresses, instant messenger IDs, and location data to personal profile pages and online community forums .  In May, Playdom agreed to pay $3 million in a costly settlement over FTC charges, similar to those set forth in the W3 complaint, that it collected information from children without notifying parents and obtaining prior parental consent in violation of COPPA.

Most notably for app developers and distributors, FTC Chairman Jon Leibowitz emphasized the importance of obtaining parental consent, and made clear that the app space is no different from traditional website platforms.  “The FTC’s COPPA Rule requires parental notice and consent before collecting children’s personal information online, whether through a website or a mobile app,” said Chairman Jon Leibowitz in a statement given in response to the settlement. According to Senator Amy Klouchar, who has been working to prevent deceptive in-app purchase practices on mobile devices, “Mobile apps can be great tools for kids to learn and have fun, but parents should never have to worry that their child’s personal information is being collected or violated.”

In light of the current evolving enforcement climate, developers, distributors and operators of apps and websites targeted at children that collect personal information, should, among other things, ensure that they adhere to the requirements of COPPA, including  the basic guidelines described below. Specifically, prior to collecting, using or disclosing personal information received from children under 13, developers, distributors and operators must obtain verifiable parental consent for any such collection, use or disclosure.  They should also provide notice on their apps, websites and other applicable platforms regarding the kind of information that is collected from children, how such information is used and their disclosure practices related thereto. Further, if and whenever requested by a parent (or guardian), such developers, distributors and operators must provide (a) a description of the specific types of personal information collected from that child; (b) the opportunity at any time to refuse to permit further use or maintenance in retrievable form, or future online collection, of personal information from that child; and (c) reasonable means for the parent to obtain any personal information collected from that child. In addition, COPPA rules proscribe conditioning a child’s participation in a game, the offering of a prize, or another activity on the child disclosing more personal information than is reasonably necessary to participate in such activity.

As apps continue their meteoric rise in popularity, and become, in many instances, the preferred method of digital content distribution and consumption, we will continue to monitor the FTC’s actions in both the online and mobile spaces, the new privacy initiatives making their way through Congress and what these events may ultimately mean for the current stakeholders.

There are obviously certain elements of the iAd environment that are unique to Apple.  Apple sold the hardware the ads are displayed on (iPhones, iPod Touches and iPads), distributed and/or sold the App the ad appears in (through the App Store) and is creating many of the ads itself.  Thus, in many ways, Apple will set the “default” for flow of information among the various stakeholders– user to Apple (via Apple’s Privacy Policy and the App Store Terms and Conditions), Apple to App developer and Apple to advertisers.  Through these last two, Apple could presumably establish requirements for the use and disclosure of user information by App developers and advertisers.

But the question remains:  are the interests of all of these stakeholders aligned?  Or does the mobile ad environment lend itself to certain inherent tensions when it comes to the use and exploitation of personal information?

For example, Apple’s Privacy Policy and App Store Terms and Conditions state that information is collected and used by Apple only in aggregated form (that is, individualized information is not collected).  Location data is separately called out, with the policies providing that location data may be collected if a user “uses any service that relies on location information.”  Such location information appears to have primary value only if used on an individualized basis, for example, to serve an ad to a user based on his or her location at any given time.

But as noted above, Apple isn’t the only entity involved.  Data can be collected in an App itself, as well as through an iAd placed in an App.  And while Apple can claim that it is solely responsible for, and has sole entitlement to, data it collects through the sale of its hardware and Apps through the App Store, that is not necessarily the case for data that may be harvested through an App and/or an iAd contained in an App.

The most valuable asset in the mobile ad environment is the granularity of data that can be collected, mined and then exploited in the future, through highly targeted ads that fetch higher and higher rates because they generate more and more revenue for the advertisers.  One example that is receiving a lot of publicity is the Shopkick app, which will be available both on the iPhone and Android phones.  Shopkick can track a user through participating malls and retail stores and enable the user to accumulate points, redeemable for gift cards, as they move through the store.  App developers, publishers, advertisers, marketers and ad networks (such as Apple) all have a strong interest in user data, which effectively puts such data into play when framing the various agreements that are the foundation to the mobile ad environment.  Thus, in entering a contract for the development of an in-App ad, the developer/publisher of the App and the advertiser/marketers placing the ad can reach agreement on what user data will be collected, by whom and how it will be maintained, used and exploited.  While some of these provisions regarding use may need to comply with requirements dictated by the operator of the App store (such as Apple or Google or RIM/Blackberry) or of the ad network, it is clear that there will likely be different standards, conditions and restrictions amongst the various stakeholders.

In addition, and of importance to consumers, privacy advocates and, perhaps, regulators, is the question of responsibility and disclosure.  More likely than not, in this new mobile ad environment, consumers are not going to draw distinctions between all of the different stakeholders (e.g. the operator of the App store, developer/publisher of the App, advertiser/marketer placing the ad, and operator of the ad network).  They just want to know how to find out how their information is being collected and used.

From a functionality and user-experience perspective, there may be resistance to placing notices, privacy policies or terms and conditions at every user entryway in a mobile ad environment–which would include both App and ad.  However any entity collecting user information is going to have an obligation to disclose its collection and use policies to consumers.  And it will be up to the consumers to sort out what rights they may have with respect to the various stakeholders and how they may vary depending on where in the mobile ad landscape that information is collected.

Obviously this is a brave new world, with the rules, protocols, rights, responsibilities and risks being established and allocated in a very fluid fashion.  And these issues are particularly timely for the DigitalHHR team.  On September 21, we will be presenting a CLE-accredited webinar entitled,  “Whose Data Is it Anyway? Privacy and Data Security in a De-Centralized Digital World”.  We will be exploring the legal and business issues raised by the need to protect personally identifiable information of end users in a digital environment, including the special issues that are present in the mobile ad space.  Information on registering can be found here.

*  George Tsiatis, a summer associate with the firm, assisted in the preparation of this article.

Most states and the federal government have specific laws that prohibit unlicensed gambling and lotteries, which are typically defined as “risk[ing] something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome” (See NY Penal Law – PEN§225.00 et seq.).  In fact, only state governments, where permitted, are allowed to run lotteries and many states outright prohibit them.  As a general matter, a lottery has three determinative, core elements: consideration (usually the payment of money), chance and prize.  Accordingly, for example, under California law Penal Code Sec. 319 , which is typical of most state anti-lottery laws, a contest or a sweepstakes becomes an illegal lottery when all three of these elements are present.  Therefore, in order to run a legal promotion (such as a sweepstakes or contest) one of the three elements of a lottery must be absent.

Sweepstakes generally enjoy an “exemption” of sorts from the lottery and gambling laws by virtue of the fact that there is no purchase required in order to enter (leading to the “NO PURCHASE NECESSARY” language that accompanies sweepstakes rules), thus eliminating the “risking something of value” element described above.  In contrast, a contest will often retain the consideration element but instead require some demonstration of skill from the participant, thus removing the core element of chance from equation.

Against this backdrop, the first slew of promotion-type apps taking advantage Apple’s revised developer terms have been sweepstakes as opposed to contests.  Specifically, these new applications are allowing entry into games where the winner is selected purely on a randomized basis, without having to demonstrate any skill in participating.  Therefore, laws applicable to the administration of sweepstakes, as opposed to contests, are at issue.

Historically, the largest legal hurdle and source of the most debate regarding the operation of sweepstakes has been over the removal of consideration from the equation.  Merely removing the requirement of an entry fee will not always satisfy the “no consideration” requirement as consideration can come in many forms, including the purchase of a product, an SMS text, subscription fees or otherwise engaging in activities that require substantial time or effort, such as completing an online survey, etc.  And even when some amount of consideration exists, promoters have generally avoided having their sweepstakes classified as unlawful lotteries by providing a universally-available, free alternative method of entry (“AME”) (such as a mail-in postcard, etc.) that provides equal treatment to entrants who use the AME.  Thus far, the sweepstakes applications available on the App Store (whether free or for a fee), such as “Scratch Off Now” from Thought Quarry LLC, which enables marketers to include their branding, messages and products on the app, are coupled with an AME on a corresponding website, allowing entrants the opportunity to participate in the sweepstakes without downloading the particular application.

However, providing an AME may not be enough, under some state laws, to make the promotion legal if the entrants that have paid consideration do not receive something of value for the payment.  An end user may not pay just for a chance to win a prize and state anti-gambling laws may be invoked (as is the case with online poker, sports betting and other forms internet-based gambling) if an end user is required to purchase (a) an app itself or (b) entry in a sweepstakes via such app and does not receive some value in return.  That “return value” needs to only be equivalent to the value paid for the app or the entry.  To take a recent example, paying entrants in a recent sweepstakes promotion tied to the Iron Man 2 movie release received a can of Dr. Pepper.

In addition to providing something of value to entrants, a sweepstakes can avoid classification as an illegal lottery if it clearly promotes the sale of “real” products or services, distinct from the game itself.  Accordingly, it is no surprise that Apple has limited its developers to creating “promotional” sweepstakes and contests. Even Facebook, which similarly allows third parties to run contests and promotions on its platform, continued to refine and post increasingly specific guidelines throughout the past year in an attempt to ensure that these gaming-style promotions are run in accordance with applicable law. In fact, Facebook now prohibits promotional sweepstakes that condition entry upon the purchase of a product, completion of a lengthy task, or other form of consideration.

Needless to say, the risks are real for both social networking sites and device manufacturers housing applications, particularly when both virtual and credit card transactions are occurring on and through the sites and platforms, including where credit card data is maintained (e.g., purchasing raffle tickets via an iPad app where the credit card charged is on file with Apple via iTunes), as the potential exists for liability to extend beyond the app developer.  Ultimately, social networking sites and platform developers need to ensure that their marketing partners, sponsors and developers carefully structure their promotions and apps to comply with anti-gambling laws.

As always, we will keep an eye out for developments in this area of the law, particularly as the lucrative and viral nature of these promotions continue to expand exponentially across new media platforms and devices.

The ruling came in a class-action against Simon & Schuster.  Laci Satterfield, the class representative, claimed that an unsolicited text message sent by Simon & Schuster to her son’s cell phone, which promoted the Stephen King novel, appropriately entitled Cell, violated the TCPA, which prohibits individuals from making calls using any automatic telephone dialing system (“ATDS”).

Back in 2004, Satterfield signed up for a free ringtone from Nextones.com, at the request of her six-year old son. In order to receive the ringtone, Satterfield had to click through many sign-in pages and consent to a general terms of use agreement, and ultimately opted-in to receive promotions from Nextones and its “affiliates” and “brands” (next to the opt-in box was a “warning” that the free ringtone may not be available if the user did not opt in to such promotions).  However, Satterfield claimed she did not believe she was consenting to receive text messages by agreeing to receive promotions from Nextones or its affiliates.  A year later, Satterfield received a text message from Simon & Schuster, advertising its publication of Stephen King’s novel. 

The District Court, without ruling on whether a text message constitutes a “call” under the TCPA, initially granted summary judgment for Simon & Schuster, holding that it had not used an ATDS and that Satterfield had consented to the message.  On appeal, the Court of Appeals reversed and remanded the District Court’s decision in a three part holding which concluded that (1) there was a genuine issue of material fact as to whether the system used by defendants constituted an ATDS, (2) text messages fall within the scope of TCPA’s regulation of “calls” and (3) Satterfield had not provided express consent to receive the promotional text messages. 

The primary focus of the Court’s decision was the one issue the District Court did not address, namely, whether a text message constitutes a call under the TCPA. The Ninth Circuit first noted that TCPA was designed to “regulate the use of an ATDS to communicate or try to get in communication with any person by telephone.”  The purpose was to protect the privacy of individuals from the invasion posed by an ATDS.  The FCC had previously stated that text messages did fall within the purview of the TCPA’s wording “to make any call.” Since the FCC inclusion of text messages was a reasonably included within a regulation of telephone communication, and was not contrary to the purpose of the statute, the Court deferred to the FCC’s decision (as well as examined the broadest dictionary definition of the word “call”). 

The Court also held that Satterfield had not expressly consented to receive the text message when she consented to receive promotions from Nextone affiliates and brands.  The Court noted that express consent must be “clearly and unmistakably stated,” which it found was not the case here, given that Satterfield agreed to receive promotions from Nextones, not Simon & Schuster.  The Court determined that Simon & Schuster was not an “affiliate” of Nextones, since Nextones neither owned nor controlled Simon & Schuster, and did not consider them a subsidiary. 

Given that text messages fell within the TCPA and Satterfield had not consented to the text, the case was remanded for consideration whether the equipment used by Simon & Schuster had the requisite capacity to be considered an ATDS.    

While this ruling is not a final determination of this issue, and the battle in court will continue, it raises quite a few interesting issues and questions to navigate.  Notably, this ruling will have a significant impact on any business that plans to run a promotional campaign via text messaging – such entities must ensure that any such promotion will be compliant with all applicable laws and regulations, including the consistently evolving standards that favor consumer protection and privacy.

In addition, Simon & Schuster’s exposure is noteworthy.  While the Court ruled that Simon & Schuster could not take advantage of Nextone’s defense based on “consent”, it may still be liable as the source of the text, sent via Nextone’s marketing partner, which was also named as a defendant.

The lesson for entities like Simon & Schuster seems to be that they must take heed when entering into similar types of arrangements to ensure that agreements with marketing companies include the appropriate protections (e.g., representations and warranties, indemnity obligations, etc.) to avoid financial exposure.  The ever-evolving interpretation of existing statutory and regulatory schemes makes such prudence vital, especially when launching initiatives involving new technologies or existing technologies in a new way.

We will keep an eye on the progress of this and similar cases to keep our clients informed and protected.

*Special thanks to Kathleen O’Donnell for her assistance in preparing this article.

• As online, targeted advertising becomes more and more common, the question of balancing privacy concerns and commercial demands is becoming increasingly more complex.  While website privacy policies can disclose how information provided to the site’s publisher may be used, they can’t explain how and why you are being shown a specific advertisement when you visit the site.  Joseph Turow, a marketing professor at the Annenberg School for Communication at the University of Pennsylvania, has developed an approach to provide consumers with more information and control over how they view ads.  Mr. Turow’s plan:  place an icon on each ad that signifies that the ad collects or uses information about users.  Clicking on the icon will bring you to what Mr. Turow calls a “privacy dashboard” that will show you exactly what information was used to choose that ad for you and provide an opportunity to edit the information or opt out of ad targeting. 
• A broad array of ad organizations is asking the Federal Trade Commission to delay implementing new guidelines on testimonials.  One of the proposed changes under consideration would require bloggers, online commentators and others to disclose connection they have to marketers.  In the joint letter to the FTC, the ad organizations, including the American Association of Advertising Agencies, American Advertising Federation and others, say the proposed regulations would result in uncertainty and increased costs for marketers.  Some on Madison Avenue are also concerned they might be held liable for bloggers’ failure to disclose ties to marketers. 
• While it may not be surprising to hear that purchases of CDs dwindling rapidly – 17 million fewer in 2008 compared to 2007 according to NDP – and that the number of purchase music downloads increased by 29 percent last year, it may be to learn that the number of people buying music is falling at a considerable pace.  According to research from the NPD group, the number of total music buyers fell by 13 million in the US last year. 
• Did you ever wonder what happens to your data after it has been stolen?  A U.K. Web security firm found information about several hundred thousand individuals on a botnet server in the Ukraine.  It has since been shut down and the authorities notified, but it goes to show how data from several sources can be fused together indiscriminately and used for criminal intent. 

“TV Everywhere”, the brainchild of Jeff Bewkes, CEO of Time Warner, the largest owner of cable networks, including TNT, Cartoon Network, CNN and HBO, would put all cable programming on the Web in places such as Hulu, MySpace and Yahoo TV.  The catch—viewers will have to prove that they already pay for the content through a TV subscription with a cable, satellite or telephone company.  And like the dry cleaner, no ticket, no shirt (or, in this case, show).

The initiative is, in many ways, the product of a “perfect storm” of the realities, opportunities and challenges facing not just the cable/satellite/telco industry and content owners, but the advertising industry and advertisers themselves.  Here’s what is at play:

• Cable, satellite and telco TV is one of the few sources of subscription content that people are willing to pay for.
• That fact keeps most video content and programming off the Web as cable networks fight to preserve the 50% of revenue that comes from subscribers.  Their fear is that, with content freely available on the Web, many viewers may decide to simply terminate their pay TV service.
• The content owners and networks are often reluctant to put content directly online for fear that the cable companies will not want to pay top dollar to the media companies who are, in effect, undermining the cable subscription model.
• Yet the content owners and Web publishers recognize that there are ad dollars to be made by placing more and more content and programming on the Web.

TV Everywhere is intended to address all of these points.  In theory, pay TV subscribers would have online (and perhaps mobile) access to all of the TV programming included in their pay TV package.  You would log in, provide information regarding your pay TV subscription (perhaps via an “unlock” key you get from your pay TV company) and can have access to a robust library of programming.

Viacom and ESPN, two of the largest programmers, appear to be open to such an initiative.  According to the report in MediaDailyNews, Viacom is working with cable operators to develop an authentication process.  ESPN is also evaluating certain technology that might be deployed.  And Time Warner Cable has been testing a system in Wisconsin which enables HBO subscribers to watch shows online.

New research seems to support claims of the cable industry that making cable programming available to subscribers regardless of which of the “three screens” viewed—TV, PC and mobile—would lead to increased market demand.  The Diffusion Group found that 16% if cable subscribers who spend more than $100 per month for TV service would spend an additional $20 per month to deliver that same content to their PCs.  (No word from Diffusion about how the other 84% of subscribers feel.)  The research revealed that the percentage of cable subscribers willing to pay more for additional access on other screens increased as the added cost for the access decreased.

With broad participation by pay TV providers and Web sites offering the video content (presumably any site with an agreement with the media content providers), this initiative could be entirely system and provider agnostic.  The clear advantage to subscribers is added access to video content that they already pay for.  For the Web sites, perhaps an opportunity to provide targeted advertising—after all, the log-in process could provide information about the subscriber.

However, the hurdles are substantial.  Put aside for a minute the enormous endeavor needed to develop and implement a system that could process and authenticate information from millions of pay TV subscribers with hundreds of plans offered from dozens of providers that would need to be integrated onto perhaps thousands of platforms across the Web.  (Now that I’ve written that sentence, it seems absurd to “put it aside.”)  But the cooperation needed by all of the stakeholders—pay TV providers, broadband service providers, Web site operators—is substantial, to say the least.  Reconciling issues such as sharing consumer information will be tremendously difficult, both from the consumer facing (privacy policies, anyone?) and business intelligence standpoints.  Certain legal restrictions on the use and/or disclosure of such information may also apply.

Moreover, what type of information would be provided to the Web site operators?  They would likely want access to subscriber information in order to sell targeted advertising, an interest shared by the programming providers.  However, will pay TV providers want to share such information—giving the Web sites a revenue advantage—without participating?

Lastly, are consumers willing to go along here, undertaking yet another login and authentication process, exposing themselves to yet more advertising and eroding privacy a bit further, all to watch more TV outside of the comfort of their own living rooms?

We will watch developments here closely as these are some BIG questions.

The report, entitled “Self-Regulatory Principles For Online Behavioral Advertising:  Tracking, Targeting, and Technology”, is actually the result of a process begun in late 2007.  At that time, the FTC sought public comment on its preliminary set of principles for self-regulation of online behavioral advertising.  The latest report summarizes the comments received by industry insiders, responds to the main issues raised in those comments and establishes revised principles intended to guide the industry.  Such principles include the encouragement of transparency and consumer control, with the expectation that website operators provide clear and prominent notice regarding behavioral advertising and effective disclosure mechanisms that are separate from their privacy policies so that Internet users understand what information is being collected, how and for what purposes.

However, some say its just a matter of getting Internet users to feel comfortable with what behavioral targeting does and how its used, in an attempt to dispel the widespread notion that its just “creepy” and, ultimately, an invasion of our privacy.  It is certainly a daunting task, especially because much of the technology used to track Internet use is done on the back-end, which is not seen by users.  While this provides efficiency for advertisers and website operators, it makes it more difficult to let users known when they are being tracked. The key issues have been, and will continue to be, notice and choice of consumers.

Although these will continue to be difficult waters to navigate for the foreseeable future, particularly in the mobile space, the advertising community is definitely taking notice that an informed and concerned consumer base needs to be convinced of the benefits of behavioral targeting in practice, as opposed to in theory.  This issue also presents a conundrum for website operators and content owners that are, at all times, attempting to reconcile maximization of user experience with the perception that their users’ privacy is being compromised by technology and the monetization of advertising.  There will undoubtedly be more to discuss on this issue soon. Stay tuned.

• E-commerce sites, especially Amazon, the biggest of them all, got some bad news as the New York Supreme Court upheld the validity of a law requiring e-tailers to collect state sales tax. Amazon and Overstock.com sued based on a 1992 Supreme Court ruling that a company had to have a physical presence in the state to collect taxes.  Appeals are likely but for now, it looks likely that sales tax on e-commerce is inevitable.  More information is here.
• A task force has been formed by four Madison Avenue trade groups, with the support of the Council of Better Business Bureaus, to develop industry guidelines for new forms of online behavioral advertising and to lobby the government regulators and policymakers on the benefits to consumers.  The initiative is in response to potential government regulations that would limit new forms of online user targeting.  More details here.
• Reports out of Washington say that Julius Genachowski is being considered to take the chair of the Federal Communications Commission.  Although he was a former general counsel at the FCC and knows the agency well, he is better known as a digital media veteran, a longtime executive at InterActiveCorp and founder of a D.C.-based VC firm which has invested in numerous Web companies.  Here’s a piece from all things digital.com discussing the proposed appointment and industry reaction.
• Two consumer groups are set to appear before the FCC to seek an investigation into mobile ads.  The Center for Digital Democracy and US Public Interest Research Group claim that mobile ad firms don’t fully disclose the extent of the information they collect from consumers.  Here’s an article from the San Francisco Chronicle detailing the debate.

According to the MMA, an Ad Impression is the measure of the delivery of an advertisement from an ad delivery system in response to a user request, whether it is an active or passive act on behalf of the user. The definition specifically includes commentary on key concepts to be considered in defining a valid ad impression, including: (1) an acknowledgement that an ad request is NOT the result of robotic activity, (2) a recommendation that cache-busting techniques should be utilized to prevent undercounting of impressions due to delivery of cached responses to user ad request, (3) a recommendation that measurement of ad impressions should occur as late in the ad delivery process as possible to ensure users have the greatest possible opportunity to view the ad and (4) that advertisements delivered to mobile users without an accompanying request for the ad (such as in the case of pushed content) should not be counted unless there is evidence that a user accesses such ad (which, the MMA points out, should apply to idle screen ads, offline ads and cached ads).  The MMA also calls for more “responsible” reporting on behalf of the measurement organizations to identify any deficiencies/limitations in accurately capturing ad counts.

In defining Streaming Video Advertising, the MMA encourages ad counters to pay attention to the buffering that occurs upon the initial delivery of a video commercial, in order to maintain the concept of counting only when the user has the greatest “opportunity” to view the ad (i.e., a valid streaming video ad impression should only be counted once the video ad begins to appear to the user).  The MMA also encourages the development of functionality for media players to be able to identify the buffering prior to the display of the video ad, and points out the importance of adhering to certain caching principles (as outlined in the definition of Ad Impression), as significant caching functions are often used to facilitate the delivery of streaming videos.  As with display Ad Impressions, the MMA says that the measurement of a Rich Media Ad Impression should occur as late in the process as possible, and encourages movement towards client-side implementation for counting mobile Rich Media ads. 

Lastly, MMA defines Click Measurement in the context of ad impressions that include clickable content, i.e., content that a user may click on to obtain additional content or initiate a transaction, and states that in the event a click transaction may be initiated by user activity that is in proximity to the clickable ad, the specific parameters used for measurement of the associated clicks should be disclosed.  Moreover, the MMA says that regardless of the differing methods used for click counting, these methods should be fully disclosed to users and that development and use of unique click identifiers, as well as establishing processes to filter and exclude invalid clicks from measurement counts, should be encouraged.

The MMA’s efforts call for a more consistent, globally applicable measurement process, which they say is essential for the continued growth of mobile advertising campaigns and future industry standardization.  In effect, the MMA is clearly looking to inspire building a strong currency that can be independently measured and audited.  The recommendations reflected within the new definitions will also bring a level of culpability and transparency to establishing standards for mobile ad currency that the industry has not yet seen, which will inevitably impact how companies structure their agreements with third parties with respect to calculating ad impressions for purposes of minimum advertising commitments, revenue shares based on CPM and CPC, promotional placements, etc.   It will be interesting, and important, to take note of how the movement towards standardization plays out in practice, and if it means our clients can look forward to a sense of predictability and uniformity when striking deals that have mobile ad sales components.