February 15, 2008, 12:00 AM

“Free” offers cost ValueClick $2.9 million in settlement with FTC

The Federal Trade Commission was investigating the online marketing company over lead-generation offers that promised free merchandise, but often required consumers to sign up for a trial membership or newsletter.

Online marketing firm ValueClick Inc. has agreed to pay $2.9 million in a settlement with the Federal Trade Commission over offers that promised free merchandise, but often required consumers to sign up for a trial membership or newsletter. Separately, ValueClick reported an 18% increase in 2007 revenue to $645.6 million from $545.6 million in 2006.

The FTC had announced the investigation into ValueClick’s lead-generation practices last spring. The company, which did not admit to any violation of law, said the practices that prompted the probe were limited to its Hi-Speed Media division, which has now been consolidated into its WebClients unit.

The settlement follows recent releases of guidelines for free online offers from the FTC and the Interactive Advertising Bureau, a trade association. The FTC says any conditions attached to free offers should be displayed conspicuously and close to the offer of free merchandise. The IAB guidelines add that any purchase required to obtain the reward items should be presented “in the same color, font and size of the word ‘free.’”

The $2.9 million settlement was noted in the company’s latest financial report summarizing full-year 2007 and fourth quarter results. For the year, ValueClick reported net income of $71.2 million, up nearly 14% from $62.6 million in 2006.

Revenue for the fourth quarter was $183.1 million, 14% higher than $160.4 million in Q4 2006. Net income was $18.1 million, down 16% from $21.6 million in the prior year quarter.

ValueClick projects 2008 revenue in the range of $730 million to $745 million.

"While macroeconomic uncertainties are a current industry concern, we believe we are positioned to generate growth and healthy margins in 2008,” said ValueClick CEO Tom Vadnais. “Our diversified offerings and scale make us a preferred partner for major digital marketers in the U.S. and abroad."

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