Let's put this in a more traditional context. Imagine you run a store. In that store, you sell books. Unknown to you, your competitor has planted a spy in your story. Every time a customer enters your store, the spy goes up to them and offers a free cab ride to the competitor's store, where books are 15% off your prices.

Here's another analogy. You stretch your advertising budget to the max and buy a campaign of television ads on the local station. The night that your first ad runs arrives and you invite aunts, uncles, cousins and even your brother in law to watch your prime time debut. The moment draws near and there, on the 32 inch screen you see…not your ad, but the ad of your competitor, again offering 15% lower prices than yours.

You scream in frustration. You pull your hair out. You swear vengeance on the competitor and pick up the phone to complain to the sales manager of the TV station. And your righteous rage deflates instantly when the sales manager explains that there's nothing she can do, because it's the customer's choice. Well..kind of.

I'll explain...

Beware the Gator

Right now, there are two developments occurring online that threaten to test the legal waters for online advertising in the same way that Napster did for copyright infringement. Both depend on a small client side software program that comes in the guise of a helpful little application, but inside carries a nasty little surprise for online marketers that makes the original Trojan Horse seem like the Easter Bunny.

The first of these is Gator, and it's bundled component, OfferCompanion. I first ran across Gator when I was downloading a program that was supposed to give me a desktop update on weather reports. In the middle of the download, an alert box announced that I was also downloading Gator and OfferCompanion. To be fair to Gator, it did give me the chance to abort the install, but wasn't totally forthcoming about what Gator did. I went ahead with the install, partly because I wasn't aware of the true nature of Gator, and partly because I was curious to see what nature of wolf lurked beneath this sheep's clothing.

At first, it seemed benign enough. Gator put a innocent little icon on my desk top and gave me a little notice about what it did. Gator is a digital wallet that gives you a secure place to store all those id's and passwords that seem to collect faster than utility bills. Did I need that? Sure! Who doesn't?

The Gator Shows His Teeth

It was not too long before the Gator showed his darker side. After visiting a few sites, a pop up window appeared, telling me how Gator could put my ad right in front of my competitor's websites. Hello, what's this? My online marketer's ears perked up. This required further investigation. I sensed the onset of another net-based brouhaha. To make matters even worse, Gator is now promising that it can paste advertiser's banners right over existing banners on high traffic sites. This is arousing the ire of many web publishers and experts expect the case to be tested in court in the near future.

Nature of the Gator

Here's how Gator works. The application tracks the users usage patterns through the Net. Soon, as it learns more about the user, it begins delivering advertising messages based on the "Expression of Purchase Intent (EPI)™" engine. Advertisers can buy keywords that would match the purchase intentions of their target market. For instance, an advertiser may launch a campaign for auto insurance.

Advertising messages are delivered in one of two ways. Pop up windows could appear with an ad when you go to a site that Gator determines to be relevant to one of the keywords purchased. This site could very well be your competitors. So Pepsi could conceivably buy the keywords "coke" and "cola" and if you went to Coca Cola's website, you would see the pop up for pepsi.

The other way advertising messages are delivered through Gator is by pop up banners. Here, the EPI™ engine may decide you're interested in car insurance because you visited the Toyota site. Next time you're on CNN, you notice a banner for car insurance pop up after you've been on the site for a few seconds. The banner is the exact size of the banner that was on CNN's site and is positioned directly over the previous banner.

It's Vicious, but is it Illegal?

There's no doubt that Gator is churning up the already choppy waters of online publishing, but many parties have announced their intentions of dragging Gator into the court room.

Gator is "preventing you from seeing the critical ad space that the site relies on for advertising--this is an act of unfair competition," said Michael Overing, an attorney and adjunct faculty member at the Annenberg School for Communication at the University of Southern California.

"It's like you're driving down (the highway), and you're wearing special sunglasses, and you look at a billboard advertising Coca-Cola--but through the sunglasses it says 'Drink 7-Up.' Is that an act of unfair competition?
"I think it depends upon on what the consumer understood when they received the sunglasses. Or in the case of a pop-up ad that covers another ad, did the consumer understand this was going to occur when they downloaded the program? If the consumer understood and consented, there may not be a claim," Overing said.

"This is the kind of stuff that gets to the nitty-gritty of what the Web can and can't do," he added.

For more about Gator, read the CNET news story.

eZula

eZula's TopText also comes piggybacked with popular downloads; in this case, KaZaA and iMesh, heir apparents to the Napster legacy. When downloading and installing, a pop up informs you that TopText is also going to be installed and gives you the option of not installing. But, as with Gator, the true purpose of TopText is hidden in some rather muddy "market-speak".

What TopText Does

With TopText, you'll notice that certain keywords are highlighted in yellow when you go to websites. Again, advertisers can buy certain keywords and anytime those keywords appear on a site, they will be highlighted, along with a hyperlink to the advertiser's site. Again, to use our soft drink example, Pepsi could buy the keywords "coke" and "coca-cola". Anytime anyone with the TopText software installed goes to a site that contains these words, including Coke's own site, those words will turn into a link back to Pepsi's own site.

Following in Other's Footsteps.

EZula isn't the first to come up with this online scheme to shanghai visitors. In July, Microsoft announced SmartTags, part of their new operating system that would turn keywords into links that could be controlled by Microsoft or another third party. A flood of bad press convinced Microsoft to drop the idea. In the past, other applications such as FlySwat have modified content on websites. But, until now, no one could actually get the software installed on enough computers to make it a viable advertising force. TopText's deal with KaZaA seems to have gotten around that problem. They claim to have a user base of over 2 million potential customers.

Buying Visitors by the Click

Going rates for eZula range from 30 cents to a dollar a click. To date, advertisers have had to prove relevancy for the keywords they wish to buy. For trademarked brand names, so far only the trademark owner would be able to purchase those terms, and even that hasn't happened yet.
I don't have exact numbers for Gator, but the site indicates packages start as low as $25,000. At those rates, both players are obviously going after bigger advertisers.

A Question of Legalities

Like Gator, eZula is treading on dangerous legal ground here, despite their claims to the contrary. "Our legal counsel has been aware of everything and is telling us to press forward, that everything is in accordance with the law," said eZula spokesperson Michele McGarry.

The real point here is the question of who's rights are more important? eZula and Gator's arguments are that the user has chosen to have the software downloaded and wants to have these enhancements to their browser. They're simply fulfilling the need of their customer, who has the right to do what every they want with their browser. In doing so, however, they are altering the content that the site owner placed there without the permission of the owner. I would expect the point to be tested in court very soon, and I would guess that in this case, the rights of the site owner would supersede the rights of the user.

For more on TopText see Danny Sullivan's article on Searchenginewatch.com