ADOTAS – Epic Advertising has been no stranger to controversy. Like most interactive advertising companies getting a foothold in the Wild West — er, online world pre-2004 or so — pretty much anything went at Epic (then AzoogleAds).
Until it didn’t.
As Michael Sprouse, the company’s chief marketing office, told ADOTAS from Epic’s HQ just south of Times Square in Manhattan, all it takes is one shady customer to mar a company’s image. (Just ask the Mayflower Hotel.) And that’s what happened.
In early 2005 when the trouble began, Epic (again, like other interactive companies) didn’t have the systems in place to police its entire advertising network. “Publishers could go in and pull a creative and post it to their site,” Sprouse explained. “At that point, we weren’t buttoned-up enough to see how each ad was being executed. We had basic legal disclaimers like everyone else, but they could take ads and add their own language or place it next to, say, adult content.”
Trouble came in the form of a person in Florida who was trolling the Web and found a ringtone ad that was surrounded by what could be construed as “deceptive language,” Sprouse said. The customer complained and the Florida Attorney General got involved. Fast-forward two years.
In response to the complaint, by 2007 Epic had completely changed its approach to policing itself. It started spending about 5% of its budget on compliance issues, Sprouse said. At that point, the company was more buttoned up than a repressed governess in a Bronte novel. That’s when the Florida AG hit them with their suit (it took the investigators two years to sew up all of the details).
But the AG’s staffers were so impressed with Epic’s changes, they agreed to allow the company to settle with an assurance of voluntary compliance – in other words, there was no formal admission of guilt, but Epic did admit that there were “some holes in their system,” Sprouse noted. Another part of the agreement entailed acting as an industry watchdog and helping the Florida AG go after other non-compliant networks. Epic shelled out a $1 million to the state – which helped fund the Florida’s task force to fight online fraud.
Epic’s even recently hired an AG staffer: Jonathan Gillman is now a manager of regulatory affairs. “We really got to know him during the investigation and he was impressed with the changes we made,” Sprouse said. Epic was impressed with the investigator too. Gillman joined Epic’s compliance staff along with Anwesa Paul – who was an internet bureau law clerk with the New York AG. Both will report to David Graff, Epic’s general counsel.
Sprouse said that compliance issues are never far from their minds at Epic. The company is probably the only interactive advertiser spending so much of its budget on compliance – and it knows it. But while playing by the rules may have lost them some cha-ching in the short term, the company’s banking on the fact that, as the old saying goes, cheaters never prosper.
“We’re forgoing short-term profits so we can do things the right way,” Sprouse acknowledged. “We’re all on board. And while we know it’s not a level playing field right now, if we make a strong enough stance we believe we can change the way the industry does business.”
And if they don’t?
“Hey, advertisers know what they’re getting with us,” Sprouse responded. “They know we’re on the up and up. We police everything and they know they’re safe. And they know there’s a level of risk with our competitors that isn’t there with us because of our compliance group.”