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SUBCOMMITTEE HEARING ON THE 

IMPACT OF ONLINE ADVERTISING 

ON SMALL FIRMS 

SUBCOMMITTEE ON REGULATIONS, 

HEALTH CARE AND TRADE 

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JUNE 25, 2008 

Serial Number 110-102 

Printed for the use of the Committee on Small Business 

( 

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

HEATH SHULER, North Carolina 

CHARLIE GONZALEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

BRIAN HIGGINS, New York 

MAZIE HIRONO, Hawaii 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director 

Subcommittee on Regulations, Health Care and Trade 

CHARLES GONZALEZ, Texas, Chairman 

RICK LARSEN, Washington 

DAN LIPINSKI, Illinois 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

LYNN WESTMORELAND, Georgia, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

MARILYN MUSGRAVE, Colorado 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Gonza ́lez, Hon. Charles ........................................................................................... 1 

Westmoreland, Hon. Lynn ...................................................................................... 3 

WITNESSES 

PANEL I: 

Carter, Mr. Tim, Founder, Askthebuilder.com, Cincinnati, OH .......................... 5 

Sanar, Mr. Paul, Founder & CEO, SkyFacet.com, New York, NY ...................... 7 

Snell, Mr. Rob, Co-owner, GunDogSupply.com, Starkville, MS ........................... 8 

Rothenberg, Mr. Randall, President & CEO, Interactive Advertising Bureau, 

New York, NY ...................................................................................................... 10 

Lent, Mr. Richard, Founder and CEO, AgencyNet, New York, NY .................... 12 

APPENDIX 

Prepared Statements: 

Gonza ́lez, Hon. Charles ........................................................................................... 40 

Westmoreland, Hon. Lynn ...................................................................................... 42 

Carter, Mr. Tim, Founder, Askthebuilder.com, Cincinnati, OH .......................... 43 

Sanar, Mr. Paul, Founder & CEO, SkyFacet.com, New York, NY ...................... 49 

Snell, Mr. Rob, Co-owner, GunDogSupply.com, Starkville, MS ........................... 50 

Rothenberg, Mr. Randall, President & CEO, Interactive Advertising Bureau, 

New York, NY ...................................................................................................... 58 

Lent, Mr. Richard, Founder and CEO, AgencyNet, New York, NY .................... 66 

(III) 

(1) 

SUBCOMMITTEE HEARING ON THE IMPACT 

OF ONLINE ADVERTISING ON SMALL FIRMS 

Wednesday, June 25, 2008 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, Washington, DC. 

The Subcommittee met, pursuant to call, at 10:03 a.m., in Room 

1539, Longworth House Office Building, Hon. Charlie Gonzalez 

[chairman of the Subcommittee] Presiding. 

Present: Representatives Gonzalez, Lipinski, Altmire, Westmoreland and Chabot. 

OPENING STATEMENT OF CHAIRMAN GONZALEZ 

Chairman GONZALEZ. I call this hearing to order. 

I would preface my opening statement by thanking certain individuals that have been instrumental in our ability to actually look 

into this particular subject matter, which I think looms large for 

every businessman and woman in the United States, big or small. 

First, of course, to our Chairwoman, Nydia Vela ́zquez, who has 

allowed the committee and every member, majority and minority 

party members, to not only express an interest in what we believe 

are timely issues but to allow us to address them in a hearing setting, which means everything that is being said gets recorded. And 

this basically will allow us a resource, which we can then move on 

to the issues that confront Congress and what we are going to do 

regarding, again, certain challenges that are being faced in today’s 

modern business world. 

Secondly, committee staff, can’t say enough about them. The 

amount of work that they put in, in just the preparation of the 

memorandum, just quality work. Again, this is information that we 

make reference to with our clients when individuals ask us to describe the issue in general terms. It is because the hard work of 

the members of the committee staff that we are able to put something together. 

My own staff, special thanks because I cause them so many 

headaches on this particular subject. 

And this is only the first step, and I am hoping that we will develop something more comprehensive and that we take the ideas 

and the recommendations of those in the real world before we fashion any kind of regulatory relief. 

Dawn Rivers Baker, who actually has an online publication, 

′′MicroEnterprise Journal,′′ I want to thank Dawn for alerting me 

to what really is perplexing to many businesses that are definitely 

not big, may not even be small but truly are micro businesses. And 

2 

they even have different challenges from what we refer to as small 

businesses. 

And last but not least, to the author of the book ′′The Search,′′ 

John Battelle, for his ideas in the conversation we had the other 

day, but more for the fine work—the book is over 2 years old, but 

I still recommend it. I think it is kind of basic text if you want to 

try to understand where all this is going as far as the Internet. 

This morning the subcommittee will examine the increasing 

value of online marketing to the small business community. The 

speed and interactivity of the Internet have helped millions of entrepreneurs identify and attract new customers. But, unfortunately, not all small firms have been able to capitalize on its power. 

Even today, many small businesses face significant roadblocks to 

optimizing their online presence. 

In today’s hearing, the subcommittee will hear from entrepreneurs who have launched successful Web marketing campaigns 

as well as from content providers who support display ads and use 

the pay-per-click platform. We will also listen to testimony from 

small business owners who have both benefited from and have 

been challenged by search engine technology. These witnesses will 

testify not only to the advantages of online advertising but also to 

its limitations and its demands. 

More and more consumers are using the Internet to shop and research products prior to purchase. In fact, the National Retail Federation reports that over 92 percent of adults conduct Web inquiries before buying products in stores. And studies show that these 

shoppers are doing more than just their homework. They are buying. In 2007, online retail sales grew 16 percent to reach $116 billion. Forecasts by JupiterResearch show this trend to be on the rise 

with online sales expected to reach $171 million by 2011. 

In keeping with Internet sales, the online advertising industry is rapidly growing as well. Indeed, Web ad revenues totaled $21 billion last year. The entire industry expanded by 45 percent annually 

between 2003 and 2006, and is expected to exceed $50 billion in 

2011. By 2007, profits from online advertising had already eclipsed 

those for radio advertising. 

Needless to say, Web ads present significant revenue opportunities that small businesses cannot afford to ignore. What distinguishes online marketing from more traditional means is its abilities to micro target potential customers based on browsing histories. According to WebVisible-Nielsen, an estimated 74 percent of 

consumers use services like Yahoo! or Google when shopping online. For small businesses hoping to identify and appeal to new clients, these systems offer a refined approach to tailoring ads and 

generating revenue. As people increasingly look to search engines 

as a jumping-off point for commerce, small firms must learn to embrace and effectively utilize this particular method of advertising. 

But even with this potential, many entrepreneurs are unable to 

fully take advantage of these tools. In order for them to reap the 

rewards of search engine marketing, small businesses must first 

and foremost design their home pages with Web browsers and 

search engines in mind. While many entrepreneurs are already 

doing so, millions more don’t have the resources to build such 

search-engine-friendly Web sites. 

3 

In examining the state of online advertising, it is important that 

we keep an eye towards the industry’s future. This way, we can assure that small businesses have the kind of diversification that will 

allow them to get the most out of their often limited budgets. We 

must keep in mind that unlike their corporate counterparts, small 

businesses don’t always have the funds to pay for ad spots on 

prime time television. Rather, they need to be more strategic in 

their approach and seek out ways to make their dollars stretch further. Online marketing is a great way for them to do this. And it 

is crucial that the industry remain a viable, accessible, and affordable option. 

For small businesses, technology has been a remarkable field leveler. It has allowed many firms to compete on equal level basis 

with companies 10 times their size, but as with any technology, entrepreneurs must learn to evolve alongside the Web and industry, 

because in a world that increasingly revolves around e-commerce, 

small businesses that cannot compete on the Internet, will not compete anywhere. And this is a disadvantage our entrepreneurs cannot afford. 

I look forward to today’s testimony, and I thank all the witnesses 

for participating here today. 

I now recognize Ranking Member Westmoreland for his opening 

statement. 

OPENING STATEMENT OF MR. WESTMORELAND 

Mr. WESTMORELAND. Thank you, Mr. Chairman. 

And thank you for holding the hearing today. 

And I would also like to thank all the witnesses for coming and 

participating. 

Mr. Chairman, I think it is safe to say that the Internet has 

changed the way we all live our lives. 

Everything from how we eat to how we dress to how we receive 

our medical care has evolved since the arrival of the Internet age. 

Of particular significance is how the nature of business has been 

forever changed by this technology. The speed at which we gather 

large amounts of information has made us more informed customers, but even more importantly, it has changed the relationship 

between retailers and consumers. 

This change in the commercial landscape is providing a more advantageous environment for small businesses to advertise their 

services to potential customers. The basic techniques of Internet 

advertising mirror those of the more conventional advertising. 

However, conventional advertising, such as listings in the Yellow 

Pages, is not cost-effective due to the low response rate that those 

ads generate. On the opposite end of the spectrum are radio, television and cable ads, which are very effective. But as all of us know 

that have run a campaign, they are also very expensive. 

Internet advertising provides benefits to small businesses by 

helping them to effectively target customers on a more cost-effective basis than conventional means. This means that a small business that was once limited by geography is now able to advertise 

their products to a customer thousands of miles away for the same 

cost as advertising their products to his next door neighbor. 

Through the use of media forms of Internet advertising like rich 

4 

media, lead generation and keyword searches, small businesses are 

in a position to compete globally. 

As a former small business owner, I understand the many barriers that prohibit businesses from entering the marketplace. While 

I am looking forward to hearing about how the utilization of these 

tools have helped small businesses succeed, I am also interested to 

hear what we in Congress should be or should not be doing to help 

more small firms achieve success. 

Again, I welcome the distinguished witnesses, and I thank you 

again, Mr. Chairman, for having the hearing. 

And I especially look forward to hearing from the builder over 

here because I spent all my adult life in the building business. 

But thank you again. 

Chairman GONZALEZ. Thank you, Mr. Westmoreland. Thank you 

for your participation and a special thanks to your staff for working 

so well with the majority staff. 

I am going to instruct the witnesses of how we operate. You have 

5 minutes basically for your testimony. Now I realize you have submitted written statements. Those are made part of the record. I 

know 5 minutes goes by really quickly, but please understand that 

you probably will be able to expand on your remarks when we go 

into the question and answer. Depending on how many members 

filter out today, I may be very fortunate and Mr. Westmoreland 

may be very fortunate that we will have you to ourselves because 

we have plenty of things to ask you about. 

I first would ask you to please observe the timer. In essence, you 

have 5 minutes. When yellow comes on, you have 1 minute; and 

of course red, time is up. And then I will remind you, I think Mr. 

Chabot was going to be introducing the first witness, but he is not 

present. 

Okay. They tell me that he is on his way so we are going to go 

ahead and kind of reverse the order and pull that on you real quick 

so that Mr. Chabot will have the privilege of introducing what I believe is maybe a constituent. 

I know you are from the Cincinnati area, so I am just assuming 

that you are one of Steve’s constituents. 

So I am going to start at the other end with Mr. Richard Lent. 

And Mr. Richard Lent is founder and CEO of AgencyNet in New 

York. AgencyNet is a full service award-winning interactive shop 

that specializes on all aspects of digital marketing. The creative 

shop has 47 employees and an annual revenue of $6 million. Mr. 

Lent is chairman of the board of the Society of Digital Agencies. 

Mr. Lent, if I change one more thing on you in the space of 30 

seconds—that is the way we operate. But Mr. Chabot is here. And 

I know that Mr. Chabot is the ranking member of the entire committee, but he has taken the time to be here to introduce the first 

witness. So I am going to go ahead and defer to Mr. Chabot because I believe that he probably—not the fact that he is just the 

ranking member of the entire committee but, again, just because 

I know that he has other scheduling conflicts. 

And at this time, the Chair will recognize Mr. Chabot for the 

purpose of introducing Mr. Carter. 

5 

Mr. CHABOT. I thank the gentleman from Texas for his kind remarks. 

And he is a great American, by the way. I really like Mr. Gonzalez. 

But in any event, I do appreciate the opportunity to introduce— 

Mr. Westmoreland is a great American as well. 

Mr. WESTMORELAND. I was wondering. 

Mr. CHABOT. But I wanted to introduce another great American, 

and this gentleman happens to be from my district, from Cincinnati. And I am very, very pleased to be able to welcome him 

here. And his name is Mr. Tim Carter. 

And when Tim left the University of Cincinnati with his geology 

degree in hand, he declined a scholarship to graduate school, and 

choosing instead to indulge his entrepreneurial spirit and go into 

the home remodeling business. An eventual master carpenter and 

plumber and roof cutter, his array of knowledge taught him that 

there were more cost-efficient ways to handle jobs. 

At the urging of his wife, Tim began writing a syndicated newspaper column called ′′Ask the Builder′′ that found a home online all 

the way back in 1995. AsktheBuilder.com, just as it sounds, that 

is the way it is spelled, and that is what it is, AsktheBuilder.com, 

was early into the online advertising fray, and it is an excellent example of how an entrepreneur with a good idea can utilize the 

Internet and be successful and prosper and help people all over the 

country in a particular area that they have substantial knowledge 

in. 

I am sure Tim will be able to provide the subcommittee with an 

interesting perspective on the evolution and direction of Internet 

advertising. It has been very successful for him and those who have 

utilized his services, and I think will be very revealing to many of 

us this morning. 

I want to thank the chairman and the ranking member, and I 

continue to think they are both great Americans. 

Chairman GONZALEZ. Thank you very much, Mr. Chabot. 

We are going to then resume in the order in which the witnesses 

are set up. So we will start with Mr. Carter. 

STATEMENT OF MR. TIM CARTER, FOUNDER, 

ASKTHEBUILDER.COM, CINCINNATI, OHIO 

Mr. CARTER. Chairman Gonzalez, Ranking Member Westmoreland and Ranking Member Chabot and other members of the committee, I sincerely thank you for granting me this opportunity to 

address you and, perhaps more importantly, answer any and all 

questions you might have concerning the impact of online advertising on small businesses and here in America. 

I have been a small business person my entire life. Within 

months of graduating from college in 1974, I was operating my oneperson remodeling and building company. When I started, I had so 

little capital, I had to borrow some of my dad’s tools and make others out of scrap lumber. But diligence, determination, and discipline have allowed me, with the help of my wife, Kathy, to build 

that small business into a sizable Internet publishing company 

that has discovered quite by accident what appears to be the true 

sweet spot of online advertising. 

6 

In the 13 years I have been operating AsktheBuilder.com, I have 

accumulated strong evidence to prove that online advertising, when 

presented in the correct format and in the right context, is a powerful tool that solves the millions of problems consumers have each 

day. Tens of thousands of the small businesses like 

AsktheBuilder.com are making a positive impact economically from 

the ability to reach customers with online ads. Their combined success helps contribute to our gross national product. Small businesses that have an online presence are an important and growing 

part of our economy. 

The transition from a hands-on remodeler to Internet publisher 

has been fascinating. When I was still working in the field as a 

builder, I was solving problems for my customers. They had leaking 

roofs, peeling paint, sticking doors and countless other issues that 

needed attention. Because I was just a one-person company, it was 

only possible for me to complete perhaps 20 or 30 jobs a year. 

But the Internet has changed all of this. Now I can share my 

nearly 35 years of accumulated home improvement knowledge via 

my articles and videos with millions of consumers at one time. 

Each day, 40,000 people on average come to AsktheBuilder.com for 

this help, and they get it for free. 

I am able to provide this service because of the revenue I receive 

each day from online ads. Not only do the visitors to my Web site 

get my advice, but through the ads that are displayed within my 

content, my visitors connect with companies that provide them 

with the exact materials and services to repair, remodel, and build 

their homes. Not only do I sell my own ads, but I also serve ads 

that are delivered to my visitors by Google, Kontera, Taboola, and 

Amazon.com. It is fast and easy to create the small amounts of 

code to insert on my Web site so these ads appear. Any small business publisher can do what I have done. And hundreds of thousands of them are displaying these ads, even now as I address you. 

I am fortunate to be a charter member of a group of small business Internet entrepreneurs. Many in this group are thriving businesses that in one way or another directly benefit from online advertising. Ravenwood Marketing, based in Boulder, Colorado, is 

one. This small business specializes in performance-based search 

engine marketing and was ranked the number one fastest-growing 

Denver-area private company by the Denver Business Journal in 

2006. Ravenwood is a three-person small business that purchases 

online ads in search engines and gets paid when it delivers highquality leads and actual sales to other small and large businesses. 

The dynamic growth of this small business would not have been 

possible were it not for online ads. Prior to the Internet, it took 

days, weeks, or months to reach the same audience that can now 

be reached in seconds with a click of a button. This blazing productivity is indeed an advertising paradigm shift of epic proportions. 

When I announced to my AsktheBuilder.com newsletter subscribers that I would be testifying today, I heard from many who 

were small business owners. Ms. Rachael Kahne is a community 

development coordinator in Nashville, Tennessee. Her pithy comment did a great job of summarizing the power of online advertising. Rachael said, ′′I can certainly attest to the fact that online 

marketing is basically the only way to go. I work for a small busiVerDate Aug 31 2005 18:01 Aug 25, 2008 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\42688.TXT RUSS
7 

ness whose bread and butter comes from online advertising. There 

is simply no other better more viral way to get in touch with a targeted audience. Online marketing allows a business to track and 

target what is working and what isn’t. It is certainly one of the 

most cost-effective solutions out there today.′′ 

In closing, I think it is important to realize that I am not unique. 

If we surf the Internet right now, I could readily show you thousands of small businesses that are satisfying their visitors with 

great content that solves problems. Allowing this open sharing of 

information should be a high priority. This allows someone like me 

to better educate people who make informed buying decisions. 

When they do this, the end result is higher productivity and more 

commerce. These are just two of the things that have helped make 

America a great Nation to live, work, and raise a family. 

Thank you for allowing me to share my success story. It would 

be my pleasure to answer any questions you may have. 

[The prepared statement of Mr. Carter may be found in the Appendix on page 43.] 

Chairman GONZALEZ. Thank you very much, Mr. Carter. 

Our next witness is Paul Sanar. Mr. Sanar is founder and CEO 

of SkyFacet.com, headquartered in New York. Mr. Sanar started 

his online company when he was only 20 years old. SkyFacet.com 

was founded in 2004 which means he is still very young and he is 

currently expecting sales of $55 million in 2008. The firm distinguishes itself by donating 5 percent of the company’s revenue to 

charity. 

Mr. Sanar. 

STATEMENT OF MR. PAUL SANAR, FOUNDER AND CEO, 

SKYFACET.COM, NEW YORK, NEW YORK 

Mr. SANAR. Chairman Gonzalez, everybody else on the committee, thank you for having me here today. 

Chairman GONZALEZ. You may have to get closer to it. 

Mr. SANAR. My name is Paul Sanar. I started SkyFacet.com 

when I was 18 years of age in 2004. I am currently 23 years old. 

We have been featured in numerous wedding magazines, bridal 

shows, and we do a lot of Internet advertising. I started SkyFacet 

at 18 when I had a factory—I had a family factory that was about 

to be bankrupt because of overseas pressures of—I am sorry. I am 

a little bit nervous. 

Okay. I first started advertising on Google in 2004, and I have 

learned the importance of profitable advertising using Google’s 

AdWord system. What I admire most about Google and of Internet 

advertising is that it really gives all companies a level playing 

field. When I first started SkyFacet.com.com, I had $5 in my pocket, and today we are a $55 million company. 

By now, most businesses have heard of Google and Internet advertising but most small firms don’t understand the difference between profitable advertising and nonprofitable advertising. If this 

concept is understood by the advertiser upon creation of their advertising program, I think they are going to be a very successful 

company. But most small companies don’t understand that. Most 

of them will try to make a marketing plan based solely on Google, 

8 

which can end up costing a company a lot of money if Google does 

not seem to work out for it. I myself had an experience with Google 

when I had hired somebody to do national listings on Google, which 

is free advertisement, not paying for a click. And I had paid 

$35,000 for that fee, for that advertising for 1 year. And it got my 

site banned by Google national listings. Forbes did an article on us. 

And I helped—it really helped us when people found out that we 

got pretty much banned by Google. And I turned the $35,000 loss 

into a $500,000 profit by letting people know that we were out 

there and that we were actually a Forbes major company or featured in Forbes, should I say. 

In conclusion, I would like to thank everybody for their time and 

the opportunity to be here. Just remember SkyFacet.com for all 

your jewelry needs. 

[The prepared statement of Mr. Sanar may be found in the Appendix on page 49.] 

Chairman GONZALEZ. Thank you, Mr. Sanar. 

I don’t think there is a father here that doesn’t wish their son 

had the success at such an early age as you have had—if you are 

still co-signing the notes, the student loans— for a lot of reasons. 

Anyway, our next witness is Rob Snell. 

Mr. Snell is co-owner of GunDogSupply.com, a company based in 

Starkville, Mississippi. In addition, Mr. Snell is managing partner 

of Snell Brothers, a consultancy that helps small businesses succeed online and is the author of the book, ′′Starting a Yahoo! Business For Dummies.′′ As a consultant, Mr. Snell has designed, developed, and marketed hundreds of Yahoo! stores that have generated 

millions of dollars in online sales. 

Mr. Snell. 

STATEMENT OF MR. ROB SNELL, CO-OWNER, 

GUNDOGSUPPLY.COM, STARKVILLE, MISSISSIPPI 

Mr. SNELL. Chairman Gonzalez, Ranking Member Westmoreland, members of the subcommittee, good morning. Thank you for 

asking me to appear on this panel. 

My name is Rob Snell. I am from Starkville, Mississippi, and I 

am here to today to talk about how search engine marketing has 

transformed my family’s business, my clients’ businesses, and to 

show how other small businesses can take advantage of this effective and affordable way to drive visitors to their Web sites. These 

days I wear quite a few hats. I am co-owner of Gun Dog Supply, 

our family retail business that sells supplies for hunting dogs. I am 

also the managing partner of Snell Brothers, and we help some of 

the 45,000 Yahoo! stores with their online marketing. 

And like you said, a couple of years ago, I wrote my dummies 

book on Yahoo! Store, ′′Starting a Yahoo! Business for Dummies,′′ 

based upon experiences we have had in the past 10 or 11 years 

selling online. I have included information from a few of the marketing chapters at the end of my written testimony for your review. 

Today I am going to share some real numbers with you so you can 

see the impact of search marketing on a real small business in dollars and cents. 

9 

Every year our Yahoo! stores get millions of visitors from the 

search engines. Most of that traffic is free. A lot of the traffic is 

from paid search ads. Tens of thousands of those visitors convert 

into paying customers. This year we will sell over $10 million 

worth of product through several different Yahoo! stores. The Internet levels the playing field for small business folks like us. 

As a consultant and a speaker, my job is to teach the little guys 

how to compete with the big guys. We use the Internet to leverage 

the strengths of the small business retailers. We have unparalleled 

product knowledge, enthusiasm for what we sell and what we do 

and we give outstanding customer service and support. Bigger retailers cannot compete when we go head to head, product to product. They sell too many things. 

A little background on the company. My parents, Warner and 

Anne Snell, started Gun Dog Supply back in 1972 on their kitchen 

table in Jackson, Mississippi. They ran tiny display ads in hunting 

dog magazines and went full time in the business in the late 1970s. 

Slowly the business changed to a retail store with less emphasis on 

mail-order sales, but business was good. 

In 1996, we had a problem: PetSmart opened across the street; 

50 percent of our competitors went out of business overnight, and 

our sales dropped, too. We dusted off our mailing list and put together a new catalog. Unfortunately, we lost money every time we 

sent a catalog in the mail. 

In 1997, I built a 5-page Web site. I wrote a killer Yahoo! directory listing, and we started getting tons of visitors. We had to figure out how to sell online and fast. Fortunately, we found an online 

store builder which is now Yahoo! Store. 

For my family, selling on the Internet has literally changed our world. We went from a retail company doing $400,000 a year and 

struggling to make payroll to becoming a multimillion dollar retailer in a few short years. How did we do that? Ninety-five percent 

of our marketing is online advertising, and 95 percent of that is 

search marketing. 

Search marketing is the one-two punch of getting free traffic and 

then buying paid ads. To get more free traffic, you write good content and perform search engine optimization or SCO on your Web 

site to rank better and get more clicks. For even more traffic, you 

can buy paid search ads to ensure you control your advertising 

message. 

The secret to our initial success with the search engines back in 

1997 was using all the content from our print catalog in our online 

catalog. Those 50 pages of text covering hundreds of products 

would help us sell everything from dog training collars to retriever 

training dummies. Originally, half of our traffic came from banners, and the other half was free traffic from search engines. 

But I like search traffic better. With search engine visitors, I can 

tell where the traffic came from and what keywords folks are 

searching for, especially the buyers. This information was gold. For 

example, someone would buy a leather dog collar, and the source 

of that order would show the sale coming on a search on Yahoo! 

for leather dog collars. Another order would come in with a search 

for retriever training videos, and they would buy some training 

dummies or a video on training retrievers. I caught on pretty quick 

10 

that converting keywords were important. People buy the things 

they search for. 

So I started to obsess over our keywords to improve our free 

search engine rankings. For example, say I wanted to rank better 

in the free search results for orange dog collars. First, I would 

choose a page on my store that is about orange dog collars. Then 

I would put the words ′′orange dog collars′′ in the title of the page 

and in the text on the page. Finally, I link to that page from other 

pages with the words ′′orange dog collars′′ in the linked text. 

If research is good, paid search is even better. With an online 

store, a small retailer can instantly have access to millions of potential customers with as little as $5 deposited in a Google 

AdWords account. Retailers can run national ad campaigns targeted only to folks searching for what they sell. Imagine doing that 

with TV spots. With paid search, you can buy ads but only for keywords relevant to your product mix. And retailers with physical 

stores can target their ads to only run in specific geographic markets that they serve. 

Search marketing is extremely efficient because you are only 

marketing to those interested in your products. In my experience, 

no other marketing method can touch search engine marketing for 

targeting the right prospects in the right places at the right time, 

which is when folks are ready to buy. 

Thank you for the opportunity to appear before this committee. 

I look forward to answering any questions you may have. 

[The prepared statement of Mr. Snell may be found in the Appendix on page 50.] 

Chairman GONZALEZ. Thank you very much, Mr. Snell. 

Our next witness is Randall Rothenberg. Mr. Rothenberg is 

president and CEO of Interactive Advertising Bureau in New York. 

Prior to leading the IAB, Mr. Rothenberg worked as director for intellectual capital for Booz Allen Hamilton. The Interactive Advertising Bureau is the trade association for interactive marketing in 

the United States. 

Mr. Rothenberg. 

STATEMENT OF MR. RANDALL ROTHENBERG, PRESIDENT AND 

CEO, INTERACTIVE ADVERTISING BUREAU, NEW YORK, NEW 

YORK 

Mr. ROTHENBERG. Thank you, Chairman Gonzalez. 

Thank you, Ranking Member Westmoreland. 

And thank you to the members of the subcommittee for inviting 

me to testify on the impact of online advertising on small firms. I 

am very honored to be here. I am the president and chief executive 

officer of the Interactive Advertising Bureau, the trade association 

for ad-supported interactive media in the U.S. We have 350 members, companies that account for 86 percent of the interactive advertising sold in the U.S. Our members include the great names of 

the online and offline media world, Google, Yahoo!, AOL, MSN, 

New York Times, CBS, and Walt Disney among them. But 61 percent of our members are small businesses earning between nothing 

and $8 million a year in advertising revenue. 

11 

Last year, together, all these businesses sold $21 billion in interactive ads. To put that in perspective, as the chairman said, that 

means that interactive as an advertising medium rivals not only 

radio but outdoor and magazines. Evidence suggests that much of 

this advertising comes from small businesses. 

Interactive advertising provides consumers with significant benefits in the form of cost-free access to content and services. 

Among the things interactive advertising underwrites are quality 

online content, news, business, entertainment, the maps that help 

you get from place to place, education and information-gathering 

tools, competitive pricing and product comparison tools, online safety tools, such as anti-spam and anti-virus protection, social networking and professional networking environments and, very obviously, communications and other online services, including, for example, e-mail, chat, telephone services, resume services, job banks, 

enhanced classified services, video, photo storage, and sharing. 

And then there is just pure communication through blogs. The 

Pew Center estimated that, in July 2006, some 12 million American adults, 8 percent of our population, were writing blogs. Some 

untold thousands of these are supported by advertising. The consumer benefits have also created benefits for business, with a disproportionately positive impact on small business. Thousands of 

businesses of all size have achieved more efficient marketing of 

goods and services through targeted online advertising. 

According to Pew, 32 million American adults have used online 

classified ads for selling or buying. Online advertising has created 

regional markets out of local markets, and national markets out of 

regional markets. Items once sold in local garage sales and pawn 

shops are now available nationally and internationally via advertised interactive auctions, in which some 40 million Americans participate annually. eBay says more than 768,000 small businesses 

across the U.S. use its online marketplace as their primary or secondary marketing channel. More than 1.3 million people supplement their income by selling materials on eBay.Many of the small 

sites exist in large part because of online advertising networks consisting of hundreds, thousands, even tens of thousands of independently owned sites. These networks are the Internet version of the 

broadcast radio and television networks with which we grew up. 

They deliver content and ads across a network of affiliates. No one 

knows how many small publishers are supported by these networks. But let me give you a sample. The 24/7 Real Media network 

sells and places ads for 1,000 Web sites. The Blue Lithium network 

reaches 119 million unique U.S. users, also through 1,000 publisher sites. The AdBright, auction-based ad marketplace represents 19,000 Web publishers. 

How diverse are they? We don’t have a census. I would love to 

do one. But let me give you a sample that came in when I asked 

my staff for some of their favorites: 

Baristanet.com is a community site started by three local women 

from the area of Northern New Jersey where I grew up. Its advertisers include a local hospital, Montclaire Family Dentistry and 

Dial Pest Control of Roseland. 

Then there is womenslacrosse.com. It is the central meeting 

place for women who participate in the oldest American sport. It 

12 

is a family business run by Cathy Samaras of Annapolis, Maryland. Its advertisers include the Kaplan test preparation company 

and the Bowie Baysox Class AA Minor League baseball team. 

And then there is Africansisters.com, formed in 1999 in Garland, 

Texas, by a group of black women to help women like themselves 

increase employment and build revenue. Its advertisers include the 

iGourmet.com Tea-of-the-Month Club, Crockpot cookery and 

Kmart. 

In summary, I want to thank you again for considering the IAB’s 

views on these issues. The success of the Internet has helped fuel 

this country’s economy. It is important to ensure that this medium 

can continue to grow and thrive. No segment of our economy will 

reap greater benefits from a robust Internet advertising industry 

than small businesses. The Internet in no small part is the primary 

engine driving small business growth in the United States. And a 

lot of that has to do with the ability to advertise. Thank you very 

much. 

[The prepared statement of Mr. Rothenberg may be found in the 

Appendix on page 58.] 

Chairman GONZALEZ. Thank you, Mr. Rothenberg. 

And I have already introduced Mr. Lent. I want to remind individuals, though, he is chairman of the board of the Society of Digital Agencies, which says a lot just in the very title of the society. 

Mr. Lent, your testimony. 

STATEMENT OF MR. RICHARD LENT, FOUNDER AND CEO, 

AGENCYNET, NEW YORK, NEW YORK 

Mr. LENT. I like getting introduced twice. That was nice. 

Chairman Gonzalez, Ranking Member Westmoreland and members of the subcommittee, thank you for inviting me to testify on 

the impact of online advertising on small firms. 

As Chairman Gonzalez stated, I am the founder and chief executive officer of AgencyNet. I have 14 years of experience producing 

strategic digital campaigns, content and marketing initiatives for 

startup companies, small businesses, medium-sized businesses, and 

some of the world’s most recognized companies. As the CEO of 

AgencyNet, I charter over all strategic vision and growth plans, 

run high-level client and partner relationships and oversee our A 

person executive team. 

I started AgencyNet in 1994 as a single-person company managing a team of global freelancers and have since shepherded its 

evolution to the 50-person agency it is today with offices in New 

York City and Florida. As such, I have unique insight into the marketplace and its effects on businesses of all sizes in America. I have 

witnessed and withstood the dot-com bubble at the turn of the millennium as well as thousands upon thousands of technical innovations that have driven and changed the way consumers and brands 

interact and commerce is exchanged. 

I have attached a copy of my full biography for additional information on my background and career if you find it interesting. 

I would like to take this opportunity to articulate to the subcommittee my personal opinion on some issues relating to potential 

government regulations within the digital ecosystem. Being from 

13 

the agency side, I have a little bit broader perspective, and I can 

speak on a number of different issues. I tried to look at four in particular that I think need to be discussed. 

First is search engine dominance. I assume with Yahoo!, Microsoft, Google, and their discussions ongoing, the subcommittee has 

a particular interest in this topic. It is my opinion that Google has 

achieved a dominant position in the search marketplace by creating 

a culture of innovation and maintaining core market intelligence. 

Their search engine, coupled with their simplistic and consumer-focused user experience is superior to anything else in the marketplace. Their arsenal of Web-based tools are far reaching, well beyond just search, and they are all of a high quality and consistently 

improving. And oftentimes, they are free to consumers and small 

businesses alike. They have consistently hired some of the most intellectual and forward-thinking engineers and technologists in our 

industry and that collective intellect has empowered them to their 

market-leading position. Their technology empowers companies of 

all sizes, especially small firms, to engage, operate, and prosper in 

this new marketplace. 

While their potential allegiance with Yahoo! will certainly advance Google’s dominance within the search arena, it does not ensure that they will utilize that advantage to control pricing structures or to gain an unfair market advantage. Until something is 

proven to the contrary, I would personally deem any government 

obstruction as premature. With today’s economic state, America 

needs innovative and astute corporations to support a dynamic and 

fast-changing global economy. And to date, Google has proven to 

me that it will not rest on its laurels. 

It is important to note that neither I nor my company have a 

prior working relationship with Google. My testimony is from my 

personal perspective and as a user of their products and knowledge 

of their reputation within the industry. 

The second topic that I feel is important to discuss is privacy and 

how it relates to interactive advertising. The digital medium, while 

limitless in terms of interactivity, entertainment and educational 

value, also presents inherent privacy concerns that can be directly 

attributed to what makes an extraordinary communication medium 

in the first place, two-way data flow. 

I believe the government should continue to do its part to protect 

the privacy of the American consumer, as it always has. Clearly 

there is a fine line between involved and overinvolved. I will attempt to draw the line where it negatively affects the consumer. 

Direct mail presents similar data concerns, and obviously credit 

card companies are privy to a plethora of personal information on 

consumers. Internet data protection should be no different: 

Consumers need to be able to opt out of their personal information being stored. 

Minors need to be protected and should not be marketed to. 

Annoyances like spam, phishing scams and proactive display of 

objectionable material should be controlled and regulated. 

Data should have a shelf life and should not be sold or shared 

without a user’s consent. 

That said, though, thanks to this great conduit of information, 

advertisers have valuable data at their disposal that, if used corVerDate Aug 31 2005 18:01 Aug 25, 2008 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\42688.TXT RUSS
14 

rectly, would surely lead to a more positive, relevant and engaging 

two-way communication and a better consumer experience. Passive 

mediums like traditional television, radio, and print do not offer 

that same level of sophistication. And as a byproduct, brands have 

little tangible evidence of their campaign’s true performance directly attributable to their advertising. 

The digital medium and its inherent trackability provides the insight that they need to shift their budgets to destinations where 

the audience actually cares about what they have to say. This understanding of the return on investment is especially relevant to 

small firms whose limited budgets do not allow for the cushion of 

fiscal mistakes. 

Intelligent brands will use this data to serve advertising that is 

potentially germane to a consumer. Advertising by its very nature 

has historically been intrusive. Digital allows for relevancy in advertising and marketing that has traditionally been interruptive, 

irrelevant and emotionally underwhelming, and that market shift 

should not be stifled. 

Again I would like to thank the members of the subcommittee for 

this opportunity to share my thoughts on the digital ecosystem and 

the necessity for regulation. I have also touched on Net neutrality 

and portability of content in my written testimony. And if I can be 

of further assistance, please feel free to contact me at any time. I 

look forward to answering any additional questions you may have. 

[The prepared statement of Ms. Moore may be found in the Appendix on page 66.] 

Chairman GONZALEZ. Thank you, Mr. Lent and thank you to all 

the witnesses. 

I am going to start off with the questioning. 

And please understand that this particular committee, we share 

some jurisdiction, obviously, with the other committees, but our 

prime focus is going to be small businesses. 

Small businesses can accomplish many things. I indicated earlier, I have to be reminded that there are micro businesses out 

there which are obviously even smaller than small but nevertheless 

probably constitute the majority of businessmen and women out 

there in the business world. So we can always think in terms of 

small businesses in whatever context that we may be discussing. 

It will be very interesting. 

The other thing I want to preface some of my questions with is 

that I think, whether you are a Republican or a Democrat, truly 

I think that we need to be governed by basically what governs the 

actions of physicians, and that is: First do no harm. And I think 

you probably would agree with that. In the regulatory scheme, 

what do we do? Should we do anything? Do we allow market forces 

to play out? And I am a strong believer in that. And I think my 

Republican colleagues would join me in that particular sentiment 

up until the point where we do feel there is a disadvantage and either the consumer or a business person is no longer on a level playing field or treated fairly. And that is part of the technology out 

there in business relationships and such. 

But my first question to Mr. Carter, there is an article today, Mr. 

Carter, that appeared in The Washington Post, and it was very, 

15 

very interesting, about an individual, I think in New York, in his 

basement, and he would not give his full name, but allows you basically to download an application that blocks advertisements. I 

don’t know if you have had a chance to read the article. And I will 

quote from it a little later. 

But first things first, if you go to your site, obviously, you have 

a small business that utilizes the Internet. You have a column. You 

give advice. People come to you and so on. And that is supported 

through advertising dollars. So you really have an online business. 

But also the other aspect of it would be small businesses that 

would like to appear on your Web site for all the obvious reasons. 

The credibility of your column, obviously, spills over to those that 

advertise on your Web site and such. 

Two things, how do you promote your Web site? How do you promote your online business? And secondly, how do small business 

advertisers fare at your site? How do they get on? Do you have any 

control over who ends up appearing on your Web site? And what 

is that business relationship with individuals that may advertise 

on your site? 

Mr. CARTER. Great questions, Chairman. I. 

Promote AsktheBuilder.com primarily just through writing abundant content as frequently as I can. And because of the years of 

doing that, and because the content is higher quality, I also—I tend 

to rank very high on the search engines, you know, both Google, 

Yahoo! and even MSN. And I do about an hour a day of research 

on how I think that someone gets on page 1. And so that is—so 

I think that that is the way that I do it because I have decided it 

is a key part of my business. So I have taught myself my own— 

what many people call search engine optimization. 

I do very little advertising of my own about AsktheBuilder.com. 

The newspapers that do run my syndicated column at the bottom 

of my column do publish my URL, but I consider that incestuous 

advertising because the subscribers to any given newspaper, once 

they see that URL, they know it. So I don’t have a growing base 

from that. 

With respect to small businesses that advertise on 

AsktheBuilder, you might be surprised to discover that most of the 

advertising that I sell myself is actually small businesses. I have 

found that when I approach these small businesses, I get a more 

rapid response, a more favorable response and a quicker decision. 

And more importantly, they understand the benefits. 

As far as me controlling if they want to be on Ask the Builder, 

they have complete control of that. It is their buying decision. It 

is very easy to do. And my rate card is actually published for the 

entire world to see. If you and I were to go online right now, you 

could see right at the top there is a little advertise button, click it, 

and you see what it costs to get there. And it is very affordable, 

and it is highly effective. I have click-through rates on some of my 

advertising that I sell myself that are as high as 35 percent. That 

means that 35 percent of the people who actually see the ad, they 

actually click it because they know that that ad or that ad is communicating to them. I can solve your problem. I can clean your 

deck. I have got the right sealer, whatever the product might be. 

16 

So it is highly effective. And because of those high clicker rates, as 

you can imagine, the companies that are buying it are very happy. 

Chairman GONZALEZ. Thank you very much. 

Mr. Sanar, let me ask a question that is—you have indicated 

that—we were talking about organic search and such. And Mr. 

Carter being out there for such a long period of time that maybe 

certain keywords, he has identified, he has mentioned. So he may 

have an advantage maybe a startup business would not. And I look 

to you as a very young person out there. And you said something 

about, not to confine all of your effort on search engine or the relationship with Google. Did I hear you right? In other words, if you 

are a small business person, there is more than just basically a 

search engine organic type search-based promotion of your business. Is that right? 

Mr. SANAR. Yeah. That is correct. I mean, it is not just small 

business. I guess all businesses should diversify their marketing 

plan. But especially with small businesses that are going to get impacted a lot more than a big business would. Like if his Web site 

went down on Google, like mine did, where I lost about $400,000, 

$500,000 with the national listings, I don’t know what he would do, 

what would other—where would the people find them if they 

weren’t just number one on Google for free? 

Chairman GONZALEZ. Now when you say your site went down, 

my understanding of course is the way a search engine—and I will 

use Google as an example—is that they don’t want their system 

manipulated. In other words, legitimate inquiries, legitimate clicks 

and not some that may be created, and they are not a real inquiry, 

they are not—there is not a consumer out there hitting on that. So 

I think that is legitimate for any search engine, Google or anyone 

else, to make sure because part of how they place someone or rank 

somebody is based on the number of clicks. And so the legitimacy 

of those clicks is really the basic DNA of what we have as far as 

credibility. When you say your Web site was shut down, what do 

you mean by that? 

Mr. SANAR. Well, we were actually—we went down on our national listings. We went from like number one for diamond engagement, say, and then we went to 100 because of a third party that 

I had hired that said he was—he was getting more number one positions on Google for different keywords. 

Chairman GONZALEZ. So, I mean, the lesson to the small business person is you know that you want prominence, you want your 

name out there, but there is a legitimate way of doing it and an 

illegitimate way of doing it. There are so many lessons out there, 

and I will refer to it now. 

In our memorandum, on page 7, that was prepared by my staff, 

they point out something—I believe it is on page 7. Let me make 

sure. And some of the things that we are going over here, and that 

was in essence that 60 percent of the respondents in a survey 

found that they don’t have the resources or expertise to grow their 

companies through an Internet presence. So what we are talking 

about here, to many small businesses, is really a very daunting 

task. And you know there are minefields out there, and one of 

them of course is who you establish a third party relationship to 

promote your Internet presence, which I think I had Mr. Snell, Mr. 

17 

Rothenberg and Mr. Lent, they probably have opinions on how to 

make sure that you have a legitimate relationship with a legitimate party. 

Mr. Snell, your story is very interesting. I understand that people bid on words. You buy words. And there was an article in the 

Post a couple of weeks ago. And they were talking, I think the University of Phoenix, it is kind of an interesting story of how they are 

involved. But they were talking to someone from GM. And I think 

the quote was, we buy millions of words, millions. How does a 

small business person compete in that particular role, number one? 

The other thing, too, if you are pretty well established, people seem 

to really like you. And it is gun dog. And I am wondering, Gun Dog 

Supply— 

Mr. SNELL. Correct. 

Chairman GONZALEZ. Could I buy Gonzo’s Gun Dog Supply? 

Could I play off of your name? Is there somehow that I can actually 

buy—I don’t know if you have a copyrighted name, what protections do you have? 

Mr. SNELL. We have trademark protections. You can infringe on 

my trademark and find out what happens. 

Chairman GONZALEZ. I wish Steve Chabot was here because then 

I would say, you have good lawyers. Steve and I disagree on the 

role of the legal profession in society. 

But regardless, so you had trademark protections and such. So 

let’s say trade—and I am trying to make sure that I get your site 

down, Gun Dog Supply and such. You are pretty well protected. 

What about people that are just buying millions of words, thousands of words, how does that work? 

Mr. SNELL. Compare GM to GunDogSupply.com okay in terms of 

revenues, in terms of employees, in terms of the different number 

of skews that we have, the different number of products that we 

have. I mean, we have 1,200 products, and you know, our average 

sale is going to be, you know, between $100 and $200, where GM— 

how many different kinds of things are they into? So a huge conglomerate like a GM would have millions of keywords like they 

have millions of customers and thousands of employees. But with 

a small business—usually small businesses that are successful on 

the Internet are so much focused and so you have a much smaller 

group of keywords. You know, in our business, like I said, we have 

1,200 products, but I have got 14,000 unique converting keywords 

that I have been tracking the past 4 years. Some people collect 

stamps. Some people collect comic books. I collect keywords. That 

has the difference between us making it and not making it. 

You raised the point earlier, what would a new business do? I 

have 4 years worth of information in my index tools, which is my 

statistics or analytical package. It tells me what keywords folks 

searched on, on what engine, and when they came to my site, and 

what, if anything, did they buy, so it tells me the value of each individual keyword. 

With paid search, I am only buying about 10,000 of those words 

to send traffic to my site. But if I look in deep, deep, deep into my 

stats, I have got over 200,000 unique keywords that send traffic to 

my Web site. So, basically, what I am saying with keywords, you 

18 

want to have a very small subset of keywords that are driving most 

of your business, and you kind of keep those as your best keywords. 

You raised a point earlier about somebody who is new, who is 

getting into the business. They don’t know what keywords are 

going to convert for them. It is really easy. There are all these free 

keyword tools on the Internet. The search engines actually provide 

research tools so you can put in if you are selling, you know, pet 

doors, you can go put in ′′pet doors′′ on Google or Yahoo! search 

marketing, and it will give you suggestions on some phrases like 

′′cheap pet doors′′ or ′′automatic pet doors.′′ And these tools are 

available to anybody. And there are also paid keyword tools like, 

WordTracker and Keyword Discovery. If you look online, you can 

do a search for keyword tools, all these sites will come up. So it 

is pretty easy to get a list of the keywords that you want to learn 

about. 

Chairman GONZALEZ. Thank you. 

I will reserve the other questions, Mr. Rothenberg and Mr. Lent, 

since I have exceeded my time. 

There are very few of us. I will give the others a chance, and 

then I will come back. 

Mr. Lent, remember exactly how you want to comment on keywords because I— 

Mr. LENT. I have a question for you. A definition question, that 

you prefaced the conversation on saying we were focused on small 

business. I was wondering if you could define that for us. 

Chairman GONZALEZ. We are talking about 50 employees or less 

and such. But the truth is, it is one of those things depending, the 

setting determines what is small business is. You know, what are 

your revenues per year? How many employees and such? But I 

really do think this committee—I mean, I know how we view small 

businesses. But as I said it earlier, I was reminded that the micro 

businesses out there and the Internet opportunities that should be 

there, because I think the Internet is probably something that is 

as accessible and affordable if we keep it in a way that they can 

still use it. 

I mean, and I am going to get into particular questions about 

Amazon, eBay, search engine dominance and such and the more 

global stuff in a minute. But at this time, I would like to recognize 

the ranking member, Mr. Westmoreland, and thank him for his patience. 

Mr. WESTMORELAND. Thank you, Mr. Chairman. 

First of all, I want to congratulate all you guys for that entrepreneurial spirit. It is what makes this country great, and the fact 

that the Internet is so new—I forgot how long it has been since Al 

Gore discovered it. But it is amazing how creative people have become to be able to make money on it. 

Mr. Lent and Mr. Snell, I want you to pay close attention to this 

because you wrote the book about dummies. And this is all new to 

me, for my generation really, that aren’t really that computer literate in how to do these things. But Mr. Lent, you are an agency, 

an advertising agency. Is that correct? 

Mr. LENT. That is correct. 

Mr. WESTMORELAND. So would any of these small business owners contact you about how to go about this advertising or what 

19 

would make Gun Dog Supply sell better or—and then, would you 

go purchase these keywords for them? I mean, what kind of package does your agency offer? 

Mr. LENT. It is a wide net right now. There are so many options 

in terms of marketing online that searches is a very effective methodology but coupled with—and I think Mr. Sanar said it best, you 

really have to have a diverse media plan. You have to look at all 

the different opportunities, whether it is display advertising that 

we referenced or keyword search, a combination of all of those 

things. 

I really liked what Mr. Carter said about developing new content 

on a regular basis to drive traffic. So as an agency, first and foremost, we will sit down and we will talk to our potential clients or 

existing clients about what their objectives are, and then we will 

put together a strategic plan to accomplish those objectives, and all 

of these different touch points more than likely would be a part of 

that overall media mix. 

Mr. WESTMORELAND. Okay. Let me ask, Mr. Carter mentioned 

that he sells some of his own advertising, I guess. 

Mr. CARTER. Yes. 

Mr. WESTMORELAND. How does that correlate to you? The small 

business guy comes in, talks to you, you set him up, he starts 

catching on to this, and then starts selling his own advertising. 

How does that work? 

Mr. LENT. There are a number of what is referred to as advertising networks that essentially represent destinations, destination 

Web sites. And they will own that advertising and sell it for them 

on their behalf as if they were a broker selling that traffic. I don’t 

know if Mr. Carter is using a third-party advertising serving network or doing it direct. But usually, you will get a much larger audience if you bring on an agency that does that as their sole focus. 

That said, there is obviously a very loyal fan base to 

AsktheBuilder.com, and certainly I am sure that there are unsolicited requests for sponsorship and advertising that Mr. Carter receives. And based on those requests, he can strike up individual 

deals with the individual advertisers. 

Mr. WESTMORELAND. Okay. 

Now, Mr. Carter, how do you get paid? 

Mr. CARTER. That is a great question, Congressman Westmoreland. 

It is really—what I am going to tell you, you might not even believe. It is so simple that I actually can’t believe it happens. I am 

serious about this. When I started AsktheBuilder.com back in 

1995, it was actually a huge Web site at the time. I had already 

at that point in time written 100 columns, and I had 100 other supplemental columns that went with the other 100. So I had 200 

pages on my Web site, which was enormous at the time. And I 

started selling my own ads right away. 

But the magic happened—and why we are here today gathered 

in this room—in 2003, when the people at Google—and I think 

they were the first. I am not positive on this. But one of the founders I believe Sergey Brin, he saw how successful their ads were on 

their own Web site. And he thought, he thought, ′′you know 

what′′—I think this is how it happened. I don’t know for a fact. 

20 

′′Why don’t we take these same ads and put them out on hundreds 

of thousands of other Web sites, and if that Web site delivers us 

a customer or a click, we will share some of the advertising revenue with them.′′ Because if you go to Google.com right now or 

Yahoo! or MSN and you are seeing that on their Web page and you 

click it, Google or those Web sites, they get all the money because 

they are doing everything. 

But those ads that are on my Web site, if someone clicks one of 

those ads, I get paid money that day by Google. Actually, I get the 

money at the end of the month. It is wired into my business checking account. But that is the transaction. In other words, it is really 

no different—I am also a real estate broker on hire. Basically, I am 

just brokering the transaction. I am getting paid a brokerage fee. 

Mr. WESTMORELAND. I understand that from Google. 

But when you said you sell your own ads— 

Mr. CARTER. Yes. Oh, how I get paid that way? 

Mr. WESTMORELAND. Yeah. 

Mr. CARTER. Oh sure. It is really kind of cool. I get the money 

up front. I make the people pay up front for the entire term of the 

advertising run. I do not do—I do not have any sophisticated tracking—well, I have tracking software that allows that customer to 

know how many times their ad is displayed and clicked. But I can’t 

do the sophisticated work like Google and Yahoo! does where—I 

have this live auction happening. They just pay me the money up 

front. And I have been doing it since 1995. And in fact, I actually 

got—my first customer was Pella Windows and they actually paid 

me money up front before the Web site was launched; they wanted 

the advertising spot. 

Mr. LENT. Congressman Westmoreland, just to add on, I just 

want to make a distinction between two different types of display 

advertising in Google’s model and Yahoo!’s model, as well. 

You pay per click, so when a consumer actually clicks on an ad 

or a search listing, you pay for that click. In the case where you 

are selling sponsorship on your site, sometimes it is a CPM methodology, a cost-per-thousand methodology. But as Mr. Carter just 

explained, there is a fixed fee for a duration. And what that ad 

shows up for is a period of time. So for the month of July, when 

we visit AsktheBuilder.com, you will see the ad for those windows. 

Whereas, in Google’s case, you don’t pay unless they click. I just 

want to make that distinction. 

Mr. WESTMORELAND. Mr. Snell, just one quick question for you 

now. You said you have got all these collections of keywords and 

different things. Do you market those for other people? And I 

mean, could you actually— 

Mr. SNELL. Yes. 

Mr. WESTMORELAND. That information would be useful to other 

people. 

Mr. SNELL. You mean my keywords? 

Mr. WESTMORELAND. Yes. 

Mr. SNELL. No, I am closing my notebook. I would not share that 

information with—because keywords, I have a friend of mine who 

competes with me at another space. He sells the exact same thing 

we do on one of our sites. It is baseball bats. And the keywords 

that convert for him and the keywords that convert for us are actuVerDate Aug 31 2005 18:01 Aug 25, 2008 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\42688.TXT RUSS
21 

ally pretty different even though we sell similar products. Because 

one of the retailers is more of a like new product and certain 

brands and another is more of like a closeouts or a discounts. And 

so based on the tone of your site, different sites selling the exact 

same things are going to have like a slightly different keyword universe. Does that make sense? 

Mr. WESTMORELAND. Yeah. 

Mr. SNELL. I had a comment on the pay-per-click side. On the 

agencies, like most of the folks who come to us cannot afford to hire 

an ad agency to do, you know, a lot of fancy stuff and hopefully 

after we get through with them, they grow to the size that they 

can. But there are a lot of smaller consultants that do pay-per-click 

advertising, paid search advertising, and there are like three or 

four different models. One is the, you know, you pay for an audit. 

They kind of look at your account, and they help suggest keywords, 

that kind of thing. It is more like an advertising agency where they 

charge you—or you spent $10,000 on your pay-per-click, this campaign, this month, they would charge you like 15 percent of your 

spam like your traditional advertising agency model. A lot of folks 

have an hourly model; you know, 75 bucks an hour to do whatever 

you want. I recommend that most small retailers—and I don’t 

know what the definition of a micro retailer would be. But most 

folks that I run across, they start off doing maybe $100,000 a year, 

and we try to get them into the million dollar club as fast as we 

can because at that point, they can hire consultants to come out 

and do stuff. Small business folks can actually get in there. These 

tools are really easy to use. 

I mean, I bought—just as an example, I bought an ad last night 

in about 5 minutes that is now running on Google, right now, just 

to use as an example. If anybody wants to play along at home, if 

you search on Google on your BlackBerry right now for ′′orange dog 

collars,′′ I will be in the number one spot—I hope—unless one of 

my competitors decided, you know, I am going to outbid him. I 

ratcheted my bid up to $2. If everybody in America were to go to 

Google and search online and click on that, what will happen is, 

I set a budget of $100. So if everybody clicks on it, after I get, you 

know, like 50 clicks, my ad is going to shut off. There are these advertising things in pay-per-click marketing to protect me and my 

account. 

Mr. WESTMORELAND. So you bid $2 a click. 

Mr. SNELL. As a maximum. And then you think about search engine, paid search engine advertising is, it is an auction-based system. They charge me as little as they possibly can. 

Mr. WESTMORELAND. Thank you. 

Mr. ROTHENBERG. Thank you, Congressman. 

Just to put a headline over what they have all been saying is 

that there now exists in the United States an ecosystem of small 

businesses, of micro businesses that simply did not exist 10 years 

ago. And to simply shape this for you, any individual can go online 

with the tools built into his or her laptop computer and create a 

Web site. That same individual, again for free, or for $10 a month 

or a small hosting fee, could go online and get a set of free services 

from numerous companies, some you have never heard of, that will 

support advertising on the site. Other companies will act as rep 

22 

firms, the same way they acted for rep firms for radio stations or 

television stations, and place ads on the site. There are thousands 

and thousands of interactive advertising agencies, some of them 

are just individuals, some of them are small shops, that will help 

you optimize the site. 

And so what we have is a situation where you have people starting blogs in their dens, listing recipes, who are using free tools to 

start those blogs, using free tools to take ads. They are getting ads 

from national marketers on there from the Procter & Gambles, 

Unilevers and Perdue chickens. And they are making an income 

out of their hobbies. That grows, and then they can afford to hire 

independent consultants. That is the ecosystem. We simply don’t 

know how many, but there are hundreds of thousands to millions 

of them out there based on the statistics that we look at from various sources. 

Chairman GONZALEZ. Thank you very much, Mr. Westmoreland. 

And if you still want to stick around, we are going to have another round. 

First of all, I want to give Mr. Snell some good news. As of 2 

minutes ago, you are number one in ′′orange dog collar.′′ My staff 

just e-mailed me that, using our government BlackBerry. 

I now would like to recognize Mr. Altmire at this time for any 

questions he may have. 

Mr. ALTMIRE. Thank you, Mr. Chairman. 

I would like to thank the panel. Many of us have had the opportunity to talk with the folks at Google and to hear about what they 

do and to hear the real-world examples here in front of us of how 

you utilize that technology really helps put that in perspective for 

me. And I want to thank you. 

And I have a question about that in particular, that if Google 

holds such a dominance in the market in the search engine capacity, and obviously it is such an important component of your business, do you have a fear of the dominance of Google moving forward with regard to search engines? 

Mr. CARTER. Who are you asking that to? 

Mr. ALTMIRE. Let’s start with Mr. Snell. 

Mr. SNELL. Google has done such a good job, it is kind of like 

with Elvis when he got into the record business. He did such a 

good job of making records that everybody wanted to buy his 

records. And Elvis said, ′′hey, I think I am going to get into movies.′′ Oh, no, Elvis is getting into movies. He is taking over. I think 

Google—I mean, they are like light years ahead of everybody else. 

The thing that—I sleep well at night knowing that there are so 

many people watching Google right now, I could not imagine the 

scrutiny that they are under from you guys, from their advertisers, 

you know, from their customers, you know, who run their ads on 

their Web sites. I mean, I don’t really have a problem. I would like 

to see less consolidation in the industry from a—more search partners. But at the same time, it is like Google could be evil. You want 

to talk about, you know, maximizing their revenue; they could immediately double their revenues. Do you know any other multibillion dollar company that could press a button and go completely to 

a pay-per-click model, totally eliminate the organic, and just like 

have a killer quarter and go out of business the next quarter beVerDate Aug 31 2005 18:01 Aug 25, 2008 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\42688.TXT RUSS
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cause everybody would go out of business and go someplace else. 

But it is in their business not to be evil. 

Mr. LENT. Not to mention, that is not their only business line. 

They are into a number of different digital tools that are oftentimes 

free to use for small businesses and for consumers alike, and they 

have really created their company on a model of innovation. And 

innovation is what we need in this country right now. 

Mr. ALTMIRE. Mr. Carter. 

Mr. CARTER. That is a great question. Probably of anyone here 

on the panel that would have a fear or should have that fear would 

be me because the other members on the panel here are actually 

buying their traffic. And my traffic, every bit of it is for free. I have 

no fear whatsoever. And I would say, I had fear 5 years ago or 

maybe a little bit longer because I didn’t totally understand the 

system. But as maybe you were not here when I said it before, I 

spent about an hour each day doing my own internal research on 

how the search engines, not just Google, just search engines, work. 

And what I have discovered—and I really do hope many small 

businesses are listening to this right now because I would be more 

than happy to help them. It is not as hard as you might think. 

What my research has shown me is that if you want to rank really 

well in the search engines, you just have to do a good job on your 

Web site. Think about this for a minute. Here is how simple it really probably is: If you were Google right now or Yahoo! and on your 

front page, when someone types in ′′orange dog collars′′ in the case 

of, you know, Mr. Smell, those top results, if they aren’t really good 

Web pages about orange dog collars, if you do that three or four 

or five times, you go, you know what, this search engine is not very 

good. I am not using it anymore. So I think what the search engines have done is they have developed sophisticated algorithms. 

They actually are able to recognize those Web sites that are working hard, that are doing it the right way, that are not selfish, that 

are actually thinking of the common good, and they reward those 

Web sites with a higher presence. I think another thing that can 

happen is that the Web—I know this from my own log files, that 

I know how much time someone spends on a page before they go 

to another page. And if all of a sudden the search engines see that 

a particular Web site that people go to this page, that they are engaged, like, wow, this is a good video or this is good content or 

whatever, their search engines go wow, that person, whoever they 

are, they must really like that. That must be a good thing. I think 

that is how simple it is. So there should be no fear. The only fear 

that I think any small business should have out there should be, 

am I working hard enough to produce really good content that engages the people that need the help, whose problems have to be 

solved. 

Mr. LENT. There is also consumer benefit to it in that the advertising is relevant, the advertising is relevant to their interests. We 

live in a world where advertising historically has been interruptive. 

It has been a billboard on the street or an interruptive ad; while 

you are watching a television program, you see a 30 second 

interruptive ad. It very well could be something you are interested 

in or it could have absolutely no interest to you at all. The technology allows for relevancy. And that is a new dynamic that has 

24 

been introduced to the new digital ecosystem, and that is valuable 

to the consumer. 

Mr. SNELL. Could I add something really quick? 

Mr. ALTMIRE. Sure. 

Mr. SNELL. I don’t want to put all my eggs in one basket. And 

we are starting to talk about Google. Let’s just talk about search 

engines. I don’t want to be dependent on search engines in general. 

Let’s just say you guys decided that people are spending too long 

much of their free time and too much time at work on the Internet, 

so we are going to cut search engines off, and we will take a search 

engine vacation for a week. Okay? I don’t want to go out of business. And so we have basically come up with several different ways 

to make sure that we are not only getting traffic from paid search 

and free search on Google and Yahoo! and MSN. I recommend to 

my clients and other retailers and the small guys, the micro guys, 

you build a customer list, you have an e-mail marketing campaign 

where you communicate both information and product specials to 

your existing customers both through snail mail and through email. You can also sponsor Web sites. Like I have a site called 

BobtheJanitor.com that sells janitorial supplies. 

We need to hook up. Unbeknownst to me, I am probably running 

ads on his site if they are contextual because like, how to unclog 

a toilet, I probably have janitorial supply ads running on that site. 

Mr. CARTER. Let me interrupt. 

Congressman, one thing that is really interesting there, is that 

the small—let me tell you how sophisticated that advertising really 

is. Small businesses can go out right now—I know they can do it 

at least through Google, maybe Yahoo! and some other ones. They 

can actually target specific sites, meaning I have in my account at 

Google, where I am displaying my ads, I am actually telling companies in the world: Here is the type of ad you will get. Here is where 

it will be. This is the positioning of the ad, and these are the type 

of people that are coming. I mean, that is unparalleled communication back downstream to the advertisers, so that Mr. Snell would 

know exactly where his ad is going to appear, and he can buy a 

specific spot on my Web site. That is powerful. 

Mr. SNELL. And I can also buy a direct ad, right? 

Mr. CARTER. Yes. 

Mr. SNELL. Again, we are going to talk after this thing. 

As far as tools to build Web sites, I think there is a misconception. I mean, I remember one of our manufacturers, we went out 

to meet them in Arizona, and they were bragging about how great 

their Web site was, and they spent $250,000 developing their Web 

site. I said, dude, I would have done that with a couple thousand 

bucks over the weekend. Why reinvent the wheel? Why design an 

internal combustion engine from the ground up when you can go 

across the street to the Ford dealer, and buy a product that works 

for you? I mean Yahoo! Store, the platform we use, is great, but 

it is not the only one. It is $50 a month. If you want to open up 

your dog supply store, we can talk maybe after this thing. But for 

$50 a month, you can have an e-commerce shopping cart that 

works. It is not $250,000. We are talking about free tools 

WordPress is free. Hosting is $10. The 60 percent of small business 

25 

owners in this country who say it is too hard to get on the Internet, 

we can’t compete; that is a cop-out. 

Mr. ROTHENBERG. Also, Congressman, there are many, many 

forms of interactive advertising. And they can all be done at the 

same time on the same site. There is contextual advertising, as 

folks are suggesting. Contextual advertising is running an ad in a 

context that is relevant to it, a Gun Dog Supply ad on a site for 

hunters. There is behavioral advertising. That is advertising that 

is relevant to your interests as a user. But it may not be on a relevant site. So let’s say you have done some research searching for 

Florida vacation spots. You have done that, and you went to Florida online magazines. Then you go on to someplace else, looking for 

recipes, you might get a resort ad there. That is behavioral because 

you have exhibited the behavior. Then there are different formats. 

Search is only, according to IAB statistics, search is only about 40 

percent of the whole. The other 60 percent is display. It is video. 

It is rich media. 

And that is another part of the cost equation here. If you were 

a small business owner and you wanted to do national video advertising, 15 years ago, it was prohibitively expensive. You couldn’t do 

it. You as a small business owner, as the owner of Gun Dog Supply, no way you could do national television advertising. Today you 

can do national video advertising online. It is cheap to do. You can 

buy a camera. You can produce it yourself with the free tools, and 

you can use the representation and distribution mechanisms to buy 

the ads and run them nationally. So it is important to point out 

the wealth of opportunity for small businesses now, to employ all 

the great tools that in the past were only available to large national or global marketers. 

Mr. ALTMIRE. Great. 

Thank you, Mr. Chairman. 

Chairman GONZALEZ. Thank you, Mr. Altmire. 

There are some observations that I am going to follow up with 

some questions. We really do appreciate the entrepreneurial spirit 

that you represent here, the enthusiasm and such. 

And yet there has to be some sort of regulatory scheme, as we 

said, to keep that playing field level and such. Maybe we don’t have 

to do anything. But I think we have to watch it carefully. I mean, 

you have heard the argument about Net neutrality and maybe 

those particular principles and the spirit of Net neutrality may be 

spilling over to other aspects of the Internet, which I think is a legitimate concern. If you want it apply it to one of the aspects of 

the Internet, maybe it is a good idea in the other. And I am talking 

about search engines and the potential for things that could happen. 

I understand where we are today. The question is, where would 

we be tomorrow? There is a basic principle here in Washington 

that we adhere to, and that is that competition is a good thing. And 

I know, at the present time, you know, we do have some—the contemplated arrangement between Yahoo! and Google and the concerns that certain Members of Congress have expressed, some of 

which I share, maybe not to the degree of others. But I think it 

does need to be explored. We have heard this argument before, that 

if someone is doing such a great job and they predominate the marVerDate Aug 31 2005 18:01 Aug 25, 2008 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\42688.TXT RUSS
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ket, why not just allow them to continue? And maybe even reach 

certain contractual relationships that perpetuate that particular 

dominance. We had this issue with Microsoft not long ago. I still 

remember a legal argument being advanced that, yes, monopolies 

are bad, but technology is so different today. It is not the same, you 

know, it is not your father’s Oldsmobile. That is true. It is not even 

around anymore. 

However, the principles remain. And there is no such thing as, 

I believe, temporary monopolies. We have had people in this particular field in the past advance arguments that we are the leaders; 

technology changes so quickly that you are going to have temporary monopolies. I don’t think temporary or permanent monopolies serve the American public or the business world very well. 

There is a contemplated agreement between Yahoo! and Google. 

And in a minute, I want to get into what is organic search and 

then what are we talking about as far as the ads themselves. Can 

a business subsist, exist through just organic searches? Or are they 

going to eventually have to take out some sort of ads? And how is 

that controlled? And who dominates in that particular arena? And 

regarding that particular—not merger because this is not a complete merger; it is still shared services and, such and the potential 

there of what it might represent because I am trying to remember 

exactly if most searches—67, 68 percent are Google searches. I forget where Yahoo! may be, another 12 to 16 percent, whatever it is. 

When you put it all together, you are probably at 78 percent or 

more of all searches will be either Google or a Yahoo! search. But 

Rob Pegoraro, in his column, fast forward May 8, in The Washington Post, ′′Google Still Unchallenged.′′ And someone has always 

said it before, and they said it a lot better, so I am just going to 

quote it: ′′It is not that Google is some tyrannical monopolist that 

must be brought to justice. This company has come to dominate the 

markets for Web search, advertising and many other services fairly 

by providing quality products at a fair price which, for most Web 

users, is free. It has moved when others have stood still: Imagine, 

for instance, how limited Web mail and online mapping would be 

if Google hadn’t reinvented each category earlier this decade. But 

that doesn’t mean that I want it to run away with the rest of the 

market. It is fundamentally unhealthy for any one company, even 

one that claims to have ′′don’t be evil′′ stamped on its corporate 

DNA, to amount to the crossroads of the Internet.′′ 

And I am going to ask, Mr. Rothenberg and Mr. Lent, for your 

own opinions. I know, Mr. Lent, you have kind of had already had 

an opinion of, ′′let’s see where it all goes.′′ 

Should Congress be concerned about the market share that will 

be represented as Yahoo! and Google obviously reach this agreement? Or if Microsoft is successful in acquiring Yahoo!? 

Mr. Rothenberg. 

Mr. ROTHENBERG. Mr. Chairman, all these companies are members of my association. 

Chairman GONZALEZ. Well, in that case, I should move on to Mr. 

Lent. 

Mr. ROTHENBERG. As you might imagine, I love all our members 

equally, big and small. 

27 

I do think that there are legitimate subjects for Congress and 

regulators to look at, and competition is one of them. 

The only point that I would like to make is that the competitiveness of this industry, the dynamism of this industry is unquestioned and unquestionable. We need to make sure that anything we 

do promotes robust development of more content, more sites, more 

places that advertising can run. Thus far, from everything that we 

have seen, certainly our own membership statistics, certainly in 

the growth of interactive advertising, and certainly in the evidence 

on this panel, we have a system that ain’t broke at all. So I would 

be very careful of kind of going across that bridge - from research, 

inspection, and exploration into regulation - without very, very 

careful scrutiny. The success of the people on this panel is based 

almost entirely on what we call the long tail of the Internet, the 

ability of these tens of thousands, hundreds of thousands of small 

sites to develop to sell advertising, to take advertising, either to 

sell it directly or to take it through online networks. And that is 

where I think this committee ought to spend as much time as possible assuring that that dynamism continue. 

Chairman GONZALEZ. Mr. Lent. 

Mr. LENT. Chairman Gonzalez, you asked a very pointed question. Should the committee be concerned? I think the direct answer 

to that question is, yes, of course. With any growth that is that 

substantial and then any dominance that is that substantial, of 

course there should be concerns. 

The line for me though draws between concern and action. And 

I believe that there should be a high level of scrutiny on any industry, especially one that is as important as this one for the future 

of this country, but this level of dominance should be scrutinized. 

But I have not seen anything in my 14 years and in the 8 years 

that I have closely been associated with following the marketplace, 

especially search and display, that would lead me to believe that 

Google is doing anything to take advantage of their market position. 

So I do believe that it should be closely watched, but I don’t 

think that—I think any action would be premature at this point. 

And that said, somebody will build a better mouse trap. It always 

happens. This is an innovation-led business. And someone, some 

small business will come out of nowhere with some great insight, 

some great intellect, and put together a better mouse trap. And 

that will happen. It is inevitable. It continues to happen. Whether 

Google will buy them or not is still up for grabs. But that will happen. And you know, very likely that level of dominance with this 

fast-paced industry will not exist at the level it is right now forever. 

Chairman GONZALEZ. Okay. 

Mr. Carter. 

Mr. CARTER. Yes, Chairman. I have some insight on this. The 

analogy between Google, Yahoo! and Microsoft, I don’t think it is 

too valid. And the reason why is, I distinctly remember the days 

when I first started using personal computers back in the mid 

1980s, and what happened is that Microsoft, I believe, got their 

dominance because of deals they made with the makers of the personal computers. So when I got my personal computer, I didn’t 

28 

have much choice. It had that on there already. The difference 

though between Google and Yahoo! and the other search engines 

right now, are your constituents, Congressman Westmoreland’s 

constituents, everybody out there in America, they are voting themselves by their own action each day as to what works and what 

doesn’t and what is good for them. And that is my own experience. 

And not only that, there are still people out there who use many 

of the different search engines. I have one of my own column editors in Victorville, California, who still uses Dogpile. I mean, many 

people in this room might not even know what Dogpile is. It is a 

search engine that still works. She loves it. There are people who 

still use AltaVista. There are other search engines out there. People are voting; consumers in America are voting each day. And they 

are—just like you want to get reelected, they are electing each day 

right now that Google, for the time being, is the winner. And I 

think you should let the people out there do it. And the best part 

is that it is free, meaning no one is compelled and no one is forced 

to use Google each day. So I think the consumers are talking to you 

and speaking to you right now through those statistics that, just 

like Mr. Rothenberg said, the system is not broken right now. It 

is going along just fine. 

Mr. LENT. Also I think it is important to add that never has 

there been a time when consumers have had a more active role in 

defining the marketplace. This is a world right now where social 

media rules communication and conversation. Consumers have a 

voice. Blogs are replacing mainstream media, as you all know, on 

a regular basis and consumers have the ability to choose. 

And, as Mr. Carter said, they have chosen. 

Chairman GONZALEZ. And I am going to yield to my colleague 

Mr. Westmoreland. 

But I am going to come back because I want to take up this concept of something being free because nothing is free. And I want 

to go ahead and explore that because I want to explore tracking, 

identifying the consumer, the consumer DNA. I think your bureau 

was quoted in today’s article regarding an application that basically blocks all advertising, the consequences to all businesses big 

and small. 

Mr. Westmoreland. 

Mr. WESTMORELAND. Thank you, Mr. Chairman. 

And I think you can tell by our panel of witnesses that this 

would be hard to regulate. But let me say this, that you know this 

hearing, it has been good for me because I have seen what an unregulated industry can do, and the fact that the enormous growth 

that, because government has not put its little tentacles in there, 

has grown at an enormously fast rate and has been beneficial to 

many, many, many small businesses. 

And according to what Mr. Lent said, and I had written down 

the same thing, there is going to be another Google to come along. 

If we go into the market right now and start regulating, what we 

may ensure is that Google remains the largest search engine out 

there because we will, Mr. Chairman, I think what we will do is 

keep other people from getting in it. And when so you start regulating the ones that are at the top of the class right now will automatically remain top of the class. And so I think we are really— 

29 

with all due respect to my friend, I think we are an answer looking 

for a problem. And right now, I just haven’t seen it. 

And I am sure if anybody knows, Mr. Rothenberg does because 

of the difference of his membership and of his organization. But I 

see—I see some happy campers out there that have gone into business, learn more and more about their business. And because it is 

an unregulated thing, they are able to do creative things to expand 

their business and use their own ingenuity to make things better, 

not just for them but for our whole economy and all of us as a 

whole. So I think it would be beneficial for us right now to leave 

the industry as it is and hope that they just continue to make more 

and more and more money so that they can pay more and more 

and more taxes. And give us the ability to do what we do best, and 

that is expand government. So, again, I thank you, and I really 

don’t have any questions, just those comments. 

And thank you for the time. 

Mr. SNELL. Can I make comment? 

Chairman GONZALEZ. Mr. Snell. 

Mr. SNELL. My understanding of the Yahoo!-Google deal and all 

this is above my pay grade. I don’t understand this acquisition and 

stuff. But it is kind of like it is an inventory situation, if I understand things correctly. When I do a search on Yahoo!, Yahoo! is 

going to check their own search marketing engine, Panama, to see 

if their ads and display those ads, but Yahoo! will also be able to 

choose to display Google’s inventory as well. 

I have a good analogy, for me anyway: It is like if I went to Target and I needed a t-shirt, it is like I am going to need a double 

extra large tall, okay. And if Target doesn’t have my size, I sure 

hope that Wal-Mart or Rhe Gap or somebody else is going to be 

right there in the store. It would be so awesome to say, here you 

go, here is your t-shirt. And I think that is what the situation is. 

It is not a merger. It is like they are not taking over their search 

engine. I think it is just a partnership on the advertising. But like 

I said, it is above my pay grade. So I may not understand that correctly. 

The main reason that I am interested in it is that with some of 

my retailers, with paid search, there is not enough inventory for 

me to buy. I have keywords, and there are only 3,000 clicks a 

month on this keyword, one specific keyword, I am not going to say 

what it is. I want 10,000 clicks, you know, and so I am on Yahoo!, 

I am on MSN. But sometimes really specific on the long tail, like 

′′orange dog collars′′ is a good example of a pretty specific keyword. 

It is not that competitive. Anybody in this room could rank for it 

if they created a little bit of content. But what happens is when 

you go to Yahoo! and do a search, sometimes the ads just doesn’t 

show up. So I see this being a good thing from an inventory perspective. Because how many $5 bills would you buy for $3? All of 

them. And there is a limited number that I can buy for my retailers when I am sending them traffic. And that is what the Yahoo!- 

Google deal is to me. 

The other thing I want to say about it is it is a lot easier to do 

to switch to a different Web site than it is to change to a different 

operating system. I think that is what Tim was saying. I switched 

from a PC to a MacIntosh. And it is tough. Man, I switched from 

30 

Google to whoever the best search engine is, and talking about new 

innovators in the space—search, okay, Google has search locked up. 

They are great. But they have been doing search for, what, 10 

years now. If you look in the social space, I mean, Google had 

orkut. Yahoo! had Yahoo! Groups and 360. These startups came up. 

MySpace was the hot thing. Now Facebook is the hot thing. I 

mean, video, Google had Google video. They had to buy You Tube 

because You Tube came out of nowhere; 18 or 24 months ago they 

didn’t exist. Google had to buy You Tube because they did such a 

better job at video than Google did. These big companies are going 

to have to innovate or acquire. So I am not worried about—Google 

is going to be—there is going to be a paradigm shift coming that 

none of us see coming. Maybe somebody watching this has an idea 

of what is going on, but it is going to totally change the game. And 

it scares the hell out of me because I have to stay on top of this 

stuff all the time. 

Chairman GONZALEZ. To a certain degree, I am going to agree 

with you. 

However, the fact that is more technology based and such I don’t 

think really escapes the whole industry or denies the industry the 

scrutiny that we would give regardless of the enterprise. And I 

have been trying to make that point since the Microsoft lawsuit 

years ago. I think those principles have served us well. And I know 

that where we are today, there isn’t a problem. The issue is, you 

may reach a point where there is a problem, but you just don’t 

have the competition or the players to do anything about remedying the problem, meaning competition. 

I am not for regulation at this point. I think we do have to view 

each and every one of these, if you want to call it a merger or a 

partnership or whatever, and the impact on, again, on the consumer, on competition and whether you have you know antitrust 

and monopoly concerns and such. By the same token, I mean, we 

have certain individuals that would like to apply a different standard maybe to another aspect of the Internet. And I have been saying all along, we don’t need a regulatory scheme in law legislatively 

enacted. If you don’t have a problem, let’s say now with the five 

principles of Net neutrality. And I am saying, don’t legislate. And 

I say the same thing here when it comes, whether it is search engine, advertising, unless you have a real serious problem that is 

identifiable and that we want to correct. 

There is one thing we wanted to point out, you know, Mr. Carter 

was saying about everything being free, and it just can’t be free because I mean you have to support your business enterprise. Advertising dollars represent that stream of revenue that allow the consumers to have all of these ′′free′′ services. Now the consumers I 

don’t believe understand that. And we are going to start running 

into issues of privacy and such. But we will leave privacy aside 

right now. 

And we will talking about the article that appeared in today’s 

Washington Post in which the bureau here is quoted. And that was 

where we have an individual in New York, I believe, in his basement. He wouldn’t give his name or— 

Mr. ROTHENBERG. Ray. 

31 

Chairman GONZALEZ. Ray ′′the blocker′′ or whoever it is, who has 

devised basically an application that would block all advertising. 

And I was speaking with staff earlier in Energy and Commerce. I 

am on the Subcommittee on Telecommunications. And we had the 

wonderful inventor, and I am just such a great fan of this individual, of TiVo. And so, of course, we had individuals saying, yeah, 

but you are driving advertising dollars away because you can basically fast forward them away. So then we had actors come and say, 

look, now you are getting advertisers into our art form. You know, 

they are placing Coca-Cola cans in different scenes and everything 

else. And then this particular actor—I want to share this with you. 

I wish I had taped it, it was so wonderful. He says, ′′can you imagine Humphrey Bogart and Lauren Bacall at that last scene, when 

the airplane is revving up its engines, and he is saying—you know, 

′′you are getting on this United flight at a reduced rate today. I 

hope you have a return, though. I know you are staying at Casablanca Inn. I will miss you very much. Let’s have one more Royal 

Scotch,′′ whatever it is. So he made his point. 

But the whole thing is, I think we have to recognize that advertising revenue is the way that businesses are able to provide many, 

many services. What I am wondering, though, is this thing about— 

this notion of being free. If I subscribe to a service that is offered 

by somebody, generally there are conditions which I and millions 

of other Americans don’t read. We just say okay. Most of those conditions allow them to track me. 

And I am going to ask Mr. Rothenberg, and anyone else, but Mr. 

Rothenberg and Mr. Lent from the industry may understand the 

importance of—what is this they are tracking me? And what exactly are they tracking that translates to a better way of advertising, which then means micro targeting, which then means it is 

maybe something available to my small business guys? 

Mr. ROTHENBERG. Chairman, let me address the broader principle first because you have mentioned it a couple of times. We believe—everybody on this panel believes, the IAB and all our members believe absolutely- in the principle of consumer control. The 

reason this medium, interactive digital media, has grown so dramatically in traffic, in user audience and the like is because you 

can choose what you want, when you want it, how to get it, what 

you don’t want. You can screen it out. So we believe in consumer 

control. Consumer control improves advertising. 

If the advertising is no good and people choose to skip it—and 

this is the TiVo principle—then the pressure is on for the agencies 

and for the marketers to make better advertising so that people 

will want to watch it. So we believe in that. 

There are forms of control mechanisms that can be illegitimately 

done and that can certainly be illegitimately marketed. Ray, in the 

story today, for example, is quoted as saying that advertising is the 

same as spyware and malware. Well, it is not. Spyware and 

malware are criminal things that get put on computers illegitimately. Advertising is something that, as you noted, pays for a 

wealth of free services. 

When the Rays of the world do things that illegitimately and illegally interfere with the ability of advertisers to deliver advertisements, the law should be able to go after them. 

32 

However, when consumers are offered legitimate tools, as they 

are on every single major Web browser, to screen, then I think it 

is incumbent on us as an industry to do two things: One is, create 

better ads that people will want to watch, that people will want to 

absorb; and the second is to do a lot better job about educating the 

public about the trade-offs. These ads are what pay for the hundreds of millions of free e-mail accounts, that pay for all the free 

videos that are online, that pay for all the financial tools that allow 

you to analyze your investments. That is what we need to do a better job of communicating. 

I think the good news in today’s Washington Post story was that 

very few people, very, very few, are blocking ads. There does seem 

to be an intuitive understanding on the part of most Americans 

that there is a good trade-off here. And it is a good trade-off, not 

an unhappy trade-off. They are recognizing that these tools and 

services make the advertising more relevant to them. And the relevant advertising is as good as the content in informing them 

about how to live better lives. So I think we are in a good position. 

But we do need to recognize the importance of education and that, 

when people are illegally blocking advertising, we need to be able 

to go after them. 

Chairman GONZALEZ. Mr. Lent. 

Mr. LENT. It is a new model. We are dealing with an entire new 

landscape right now. Consumers ingest media differently today 

than they did 5 years ago than they did 10 years ago. We need to 

recognize that. The anecdote that you brought forward on Humphrey Bogart and Casablanca, it is funny, and you know, I think— 

again, anecdotally, it makes some sense. The reality of it is, it 

would never—the consumers would never stand for it. They 

wouldn’t ingest that media. In today’s world, that analogy does not 

hold true. If Paramount Pictures created that movie today and they 

said, you are about to board your United flight on the way to Casablanca Hotel, consumers see right through that right now. There 

is too much content available at their fingertips within two clicks. 

They are not going to stand for that kind of blatant integrated advertising. We have to step up our game dramatically as an agency 

to build relevancy for our brands. For our clients who come to us 

and want to communicate, have a two-way dialogue with their consumers, we consistently talking about avoiding the old trap of 

interruptive advertising. And the whole relevancy of this data, the 

data, the transformation of the model allows for data to give insights to the consumer. 

And as Mr. Rothenberg has said, as Mr. Rothenberg said, there 

is content. There is advertising, and sometimes it is hard to tell 

which is which. And if the advertising is as strong and as valuable 

to the consumer than the content itself, that it is in fact advertising. And I can give you a very direct analogy to a project we created for one of our clients for Bacardi. They don’t sell rum online. 

Obviously, they can’t sell rum online. But they wanted to reach 

their consumers in a unique way. We know what their consumers 

do; they drink rum at night clubs. And at night clubs, music is the 

hero. So we created the most robust online music mixer and hired 

professional DJs from all over the world to create content that consumers then go online and create their own songs, download them 

33 

to their iPods, vote on them, send them to their friends. That is relevancy in a branded communication. There is not an ad on the site. 

It doesn’t talk about the product. It doesn’t talk about any of that. 

All it does is add value to the consumer that leaves behind a positive reflection on the brand. That is the new model of advertising, 

and the relevancy of understanding what consumers’ interests are 

is a natural foray. This data propagates more relevancy in a conduit, in a communication conduit. 

Chairman GONZALEZ. And I am not saying that collecting this information is not valuable in the terms that you just described. 

The question then is about full disclosure, the consumer knowing 

the information that they are being tracked, and it is very interesting to the degree that they are, because I am not even aware— 

and I need to correct myself, and I apologize, but most of the people 

in this room are so young, they have never even seen Casablanca. 

Ingrid Bergman in that scene and not Lauren Bacall. That was another leading lady, another movie. 

I will yield back to Mr. Westmoreland here. Where we started 

was really the concern of the small businesses because, I mean, we 

started talking this way. And I am wondering, okay, where do we 

plug in the small businesses? So last week or a couple weeks ago, 

I brought staff in. I said, you know, let’s Google and let’s Yahoo! 

books and San Antonio, Texas. I want to see if my little bookstore 

is still surviving out there. I don’t visit it often enough. But I try 

to place my orders there and such. And I am just wondering if y’all 

could kind of guide me through what is our—I was able to find. 

This is the Google search, and obviously, it is ′′books San Antonio, 

Texas.′′ And then what I ended up with—there are 10 pages of listings. I didn’t go past page 1. And then you can also give me your 

opinion how many people go past page 1. And what I wanted to 

compare was what I would—what I see organically and what appears. So I am just assuming, I don’t—it says local business results 

for books near San Antonio. And then they list A through J and 

even have a map. All right. And then off to the right, they have 

sponsored links, books at Amazon.com and then Barnes & Noble, 

obviously the big guys and such. Then it starts with some listings, 

books in San Antonio, Texas, in the Yellow Pages and such. What 

is paid for and what is not paid for on this page? 

Mr. LENT. You are looking at three different pieces of content 

there on that page. 

Chairman GONZALEZ. You can see this? You are young. All right. 

Mr. LENT. We talked about the fact that Google doesn’t just 

search. There are a lot of different components in their digital arsenal, one of which is their mapping technology. And that is what 

you are seeing at the top left corner of the page. That is a Google 

map. And those results are essentially the modern day Yellow Page 

results set for a particular area. In this case, you put in San Antonio, Texas, but you could just as easily put in your zip code. And 

you see the results of local businesses that fit that criteria. That 

is a standardized Yellow Page model. 

Chairman GONZALEZ. No one pays extra for this? It just pops up? 

Mr. LENT. That is right. I think there is the ability for them to 

monetize that channel, and you can buy sponsorship within the 

Google maps platform. I can’t see from here whether any of those 

34 

particular ads—or whether those listings are ads or not. Underneath, you are looking at organic. That is organic. Those are free. 

That is how Mr. Carter has built his business, as he said. And that 

right side, the right column, those are monetized links, those are 

sponsored links. That is where your Google AdWords will come into 

play. 

Chairman GONZALEZ. Okay. Then Yahoo! has a variation of it 

again. A small map. They only have three listings for books near 

San Antonio. And then, of course, over here, sponsored results 

rather than links. And Amazon and then San Antonio books. And 

Amazon.com again is listed. And again, that would basically be the 

same format. 

Mr. LENT. Yeah. Same format. 

Chairman GONZALEZ. And if you are a small business—and this 

is to Mr. Carter and Mr. Sanar and Mr. Snell, you guys know that 

I am probably not going to go past page 1, right? There are 11 

pages on Yahoo! or 10 with Google and such. But your experience 

would be, on the organics, you want to be somewhere in this first 

page. 

Mr. SNELL. You want to be number one; 90 percent of the folks 

that are clicking on organic click on the first page, and about half 

the clicks are on the first or second position, and it drops off precipitously after that. You are talking about a local search there 

with a local by including a zip code. 

Chairman GONZALEZ. San Antonio. 

Mr. SNELL. Right. If you were just looking for dog training books 

or something that would be more specific and there probably 

wouldn’t be a store for it, it wouldn’t have the local component. 

And one thing to add about the local side of things, that is like a 

subset of search. It is Yellow Pages-like in that it is a listing of 

businesses, but you have to pay to have—you have to have a commercial phone number. One of the problems that I have got with 

my Yahoo! Store owners is there are a lot times they are not buying Yellow Pages ads. They are not in that database. So these national retailers, I don’t even know if Gun Dog Supply is for local 

search. And the results from local search are not ordered by—like 

in the Yellow Pages, if you pay more, you get a bigger ad, and you 

pay for position in the physical Yellow Pages. In local search, I 

think that is done algorithmically based upon like the proximity of 

that zip code and based upon the keywords occurring in the name 

of the business and even keywords on the Web site. 

With search engine optimizations, you need to be on the front 

page. And I was talking about keywords earlier. I have got 200,000 

keywords. I have got 14,000 keywords that actually, when folks 

search for them, they end up buying something more than not. A 

lot of people get obsessed for ranking number one for only one or 

two keywords. You were talking about long tail earlier. That is basically really obscure specific searches that result in having—there 

are not that many people who have a Web site that have orange 

dog collars on it. So that would be an example of like—of a term 

that we can rank really well for, and I am not competing with hundreds of millions of other Web sites. 

Chairman GONZALEZ. Mr. Westmoreland, do you have any questions? 

35 

Let me ask you one last thing because I am always wondering 

exactly. 

If it is the free application I am getting, if it is my Gmail account, if it is anything that is basically offered for free but I am 

agreeing that they can track my Internet activity, whatever that 

means, what are they exactly tracking? Are they tracking when I 

go to the Internet and my searches? Are they tracking something 

else? 

Mr. ROTHENBERG. They are not tracking you. I think the word 

′′tracking′′ or the phrase ′′behavioral targeting′′ sends the wrong 

signals. It indicates that they know you, Mr. Gonzalez, where you 

live, who you are. People do have that information. Credit card 

companies have that information. 

Chairman GONZALEZ. Sure. 

Mr. ROTHENBERG. Your utilities have that information. So that 

information has been used in direct marketing for decades and decades and decades. That is not the information that is tracked in 

interactive. What happens is anonymous nonidentifying markers 

are placed that indicate what your interests are, in ways that allow 

relevant advertising to be mechanically, automatically delivered 

against your interests. You know, you showed the search page. I 

am in the market for a car right now. So I went online out in the 

east end of Long Island where our house is, and I plugged in ′′Ford 

hybrids.′′ And I noticed that in the paid search side of it, in addition to having some national ad, you know, Ford had a paid ad in 

there, there were a number of local dealers. The local dealers were 

there because, in my computer, based on my ISP, there is an identification of the geographical area I am in. So I have actually been 

able to identify dealers and go to their sites based on relevant advertising, in this case geographically relevant, that has been 

placed. 

I think that the terminology has done us ill. You know, tracking 

and targeting give the sense of a deer in the gun sights. And that 

is not what is being used here. What is being used are anonymous 

technological markers that indicate relevance to you based on your 

activities. 

Another thing that is very important to note is that much of this 

tracking activity is essential to the operations, not just of the interactive media but of all media. For example, I note some of the proposals that have been floating around to regulate some of this activity would regulate tracking of user activities. Well, tracking of 

user activity is the main way that Web sites use to set advertising 

prices. It is the only way they have to measure their audiences to 

know how many people are coming in. That is done through those 

markers, through those cookies. Another thing that is essential to 

the management of interactive media is the ability to count the advertising impressions. I mean, did you actually see the ad that I 

sent to you? 

Did you see it? Well, the only way to count those deliveries is 

through the same tracking mechanisms. So it is very important to 

understand that so-called tracking is what we use for assessing audience size, to set prices, what we use to assess the accurate delivery of ads to know how to charge our customers and also to be able 

36 

to deliver things that are completely, as much as possible, relevant 

to your interests. 

Chairman GONZALEZ. It would seem to me, the more information 

that we have and the particular taste and behavior of a consumer, 

the greater chances it would be that a small business might be able 

to provide that particular service or product with more specificity 

just because we have this consumer DNA that we built up. But you 

said that they don’t really know that it is Charlie Gonzalez. But 

the truth is—I will just call it a user ID number. They have got 

to know who I am. So I am all these little component parts. Every 

search that I have ever—they have got to be compiling this profile 

on me. And so they can trace it back to a particular user. I mean, 

it wouldn’t make any sense otherwise. So they do know who I am. 

I mean, it is not a quantum leap here to figure that, based on all 

the activities of all these free services, because I have got a lot of 

people tracking and—I know people don’t like the word—following 

my activities. They are compiling this profile. And so when people 

say, no, this is anonymous cyberspace, right, I think people still 

have that concern, Mr. Rothenberg, that they do know who you are. 

And they are looking into all of your activities. And I am saying 

that a consumer can agree to that. And we will be looking at that 

and exploring it. If you looked at the story this morning, I think 

Mr. Markey had his own comments on it. I think we need to carefully explore it because of the potential consequences, unintended 

or otherwise. 

Mr. ROTHENBERG. But let’s be careful to separate out what is 

possible, because everything that you are identifying is certainly 

possible, to what actually goes on as a matter of consistent practice. As a matter of consistent practice, the only way someone is 

going to know who you, Mr. Gonzalez, are, is if you subscribe to 

something, if you give your name and your address. But that is different from you just going around surfing on sites, looking at San 

Antonio bookstores and vacation spots, restaurants, books to buy. 

They know a lot about some of your preferences. And based on 

that, advertising will be able to be delivered. But that is a mechanized process that doesn’t get at your name or your address or your 

Social Security number unless somebody actively tries to put one 

and one together to make three. 

Chairman GONZALEZ. And we have different components of the 

Internet that track. I mean, ISP, search engines, applicators, all of 

them. I mean, everyone that is out there tracks pretty much. I 

mean, that is the way their business model is formulated. And I 

know we have been here a long time. 

I know, Mr. Carter, I think you have a comment. 

Mr. CARTER. I think I can summarize and speak to some of your 

points, Chairman Gonzalez. 

I maintain that there are only two reasons why people get on the 

Internet. If you boil down to the lowest common denominator, you 

come up with two of them. One is pleasure; the other one is pain 

or problems. In that context that you are talking about with respect to tracking, tagging, following, whatever, think in your own 

personal life, and everybody actually in this room, if you can go 

back in time just 10 years ago, I would venture to say that your 

life was less complicated. You spent more time doing certain 

37 

things. And what has happened is that we have got this compression of information that is ever-increasing. So your life is busier. 

Everyone’s life is busier. And what happens is, you want and need 

solutions to problems faster because that is—your life is increasing, 

just everything is getting faster. So, I maintain, and I see it on Ask 

the Builder, that that tracking or that setting of cookies actually 

is a beneficial thing. Because it allows the—whether it is Yahoo! 

or Google, whomever, even my own ads that I throw up to throw 

a solution at you for the problem you are on the Internet today, 

whether it is you are buying an airline ticket, whether your roof 

is leaking, whether you may have just found out that you have 

been diagnosed with cancer. You need help, and you need it now. 

So that type of technology is actually beneficial. 

So I ask you, as a legislature, and you, Congressman Westmoreland, and other members of the committee, that if you decide to go 

down that pathway, go down it very slowly because there has been 

good and bad with everything I think that we have had here in 

America. But at this current time, just think about this one last 

thing: Who would have ever imagined that a guy like me that used 

to eat lunch on drywall buckets—seriously, I used to sit on a 

drywall bucket and eat lunch—can compete equally with The Chicago Tribune, The Washington Post, The New York Times? I am 

a syndicated columnist. But I have an equal profile on the Internet, 

maybe in certain respects higher than some of those publications 

that have been around for years, that have millions of dollars of infrastructure. So if you start to tweak this too much or too rapidly 

or too fast, you could actually make everything go backwards. And 

that would be a very bad thing for consumers. And I beg you, before you do that, to really get in touch with your constituents and 

ask them personally, have some type of town meetings. 

I am an elected official myself actually. I mean, I know how that 

works. And get in touch with them. Find out how they really use 

the Internet and how it has impacted their life. Because those people that are buying those things, they are what have made everybody on this panel successful. So please talk to them as well. 

Chairman GONZALEZ. I would just like to add one thing. 

I, first of all, agree wholeheartedly with everything you said. 

There is one thing that hasn’t been brought up. Consumers do have 

the right to opt out. They can shut of the cookies on their machine. 

Now, granted you may just read a legal document and just say ′′I 

agree′′ without going through the process. But that is a decision 

you made. If you have a concern that your private data is out there 

and that is something that you want to curtail, you have the ability 

to do that. You may have to do a little research. You may have to 

find out what the process is for you to opt out, you may have to 

do a quick Google search and find out how to shut off your cookies, 

but that is within your power. You are capable of doing that. And 

based on that fact alone, the value supersedes the damage for me. 

Mr. ROTHENBERG. Actually, also just to reinforce, there is a fair 

amount of research already out there that says, even with the paltry amount of consumer education, that something on the order of 

40 percent of consumers clear out their cookie caches each week. 

So already people know how to control their privacy or their idenVerDate Aug 31 2005 18:01 Aug 25, 2008 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\42688.TXT RUSS
38 

tity online. So I think that education is a far better path to follow, 

certainly at this point, than regulation. 

But, generally speaking, in fact specifically speaking, I think the 

education that this committee is bringing to this process and also 

to the benefits that interactive media and advertising bring to 

small businesses, that is really the education that needs to be out 

there. So we are very pleased that you held this hearing. 

Mr. SNELL. Can I add one thing? 

Chairman GONZALEZ. Sure, Mr. Snell. 

Mr. SNELL. You guys asked us, what do we want Congress to do, 

and what do we want Congress not to do? And one thing that we 

haven’t talked about, you talked about 60 percent of the folks, you 

know, small business folks surveyed said it is hard to get on the 

Internet. I think you guys can help with, like the SBA having an 

e-commerce czar or somebody who knocks on the door, you know, 

metaphorically, and says, hey, it is real easy to get on the Internet. 

Talk to any of these guys on the panel or just surf around on the 

Internet. But most of the small businesses that are in your districts 

are probably not folks who could open up a Yahoo! Store. I would 

imagine that they are not like catalog retailers. And this is where 

a different kind of search marketing would apply. In the example 

that you gave on the bookstore, if I had a small bookstore, you 

know, in San Antonio—and forget the San Antonio part of your 

query, let’s just say you searched in—you were at home in San Antonio and you searched for books. Amazon will probably come up 

first. 

But if you were a small business, you could buy a targeted ad 

that would only run in San Antonio. So we talk about how search 

can get some of us national reach, but it can also get local businesses generic reach on these really broad keywords that there is 

no way a San Antonio bookstore could ever rank on the first page 

of Google for books. And we have done it with our copy shop. I have 

got one copy shop in Starkville, Mississippi. I will never rank for 

color copies on Google, but I can buy color copies for 10 cents a 

click and be on the first page of Google in Starkville, Mississippi. 

And I think you guys need to push that. 

Chairman GONZALEZ. I want to thank all of you. 

I know Mr. Westmoreland joins me in just thanking you for the 

time, the effort and the expense of coming and enlightening us. 

Let me end, of course, with the last—beginning and the end of 

any hearing that we have here. Our concern is small business, 

micro businesses in America. We have some representatives of 

those businesses here. And we commend and applaud you. And I 

think it is a question of education. Legislate only when totally necessary. I am not sure that is where we are. I know that on Net 

neutrality, there may be some legislation out there. But we surely 

don’t have legislation elsewhere that is impacting common practices out there that seem to be working as long as we don’t have 

any abuses and such at the present time. 

Small businesses have to be part of what is going on out there, 

and the concern being is, as long as we still have some sort of a 

model that allows their entrance into this market and taking advantage of what is there, that is what is important. 

39 

I think, Mr. Snell, your suggestion is well taken on, what is the 

Small Business Administration doing and way beyond that, what 

can this committee do to enhance and assist small businesses? As 

far as technology moving on, it can be used for a good purpose, and 

we can have good people. It is in their hands. 

But it reminds me of when I was in college, and I took a course. 

It was science for nonscience majors. The only thing I remember 

is that it started off—I can’t remember if it is a Buddhist saying 

or not and that is, just like technology, science, that the keys that 

unlock the gates to paradise also unlock the gates to hell. And that 

is what technology and science is all about. In the proper hands, 

it can be a really good thing. If you do have misuse and you have 

certain concentrations of power, bad things can happen. 

And I think we have to be ever watchful. But in the meantime, 

you know, we have you out there. And I take it that you will always have the concerns of small businesses at heart, you know in 

your own business ventures or personally what you are doing in 

your hometowns. 

And I want to thank everyone. 

And if I forget this, I will get in trouble. I ask unanimous consent 

that members will have 5 days to submit a statement and supporting materials for the record. 

And without objection, so ordered. 

And this hearing is now adjourned. 

[Whereupon, at 12:10 p.m., the subcommittee was adjourned.] 

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