Digital advertisers should be proud of their success, but they should also be worried, IAB president Randall Rothenberg told attendees at this year's State of the Industry ad:tech keynote. The cause for concern? Uninformed regulators eager to legislate interactive advertising into oblivion.

Rothenberg, who last week argued the industry's case before the Federal Trade Commission, said the spectacular revenues enjoyed by digital advertisers is very much at risk.

"We're about to reach $20 billion in revenue, which is about one third of what TV has," Rothenberg said. "But there are people who want to regulate you out of business. The state of the industry is excellent, but it is very much at risk."

Advertisers are facing a backlash from what Rothenberg labeled as anti-consumer groups that have proposed do-not-track lists and methods for opting out of online ads.

While a world without ads is a concern to people like Suzie Reider, who heads up ad sales for YouTube, such suggestions point to a changing reality that blurs the line between content and ads.

"If people had the ability to opt out of ads, I think a lot of them would," Reider said. "We need to think of our ads as content. That's where we're heading."

That's a sentiment shared by Matt Freeman, CEO of Tribal DDB, who said brands that have made the successful leap into the digital space have done so because they are able to think of themselves as media companies no matter what their primary product is. As an example, Freeman pointed to a Tribal campaign for Volkswagen that made a strong departure from typical TV ads. In the campaign, Tribal made a series of short films featuring Volkswagen cars as part of each short's overall story.

But Freeman acknowledged that campaigns like the one he talked about are very much at risk if regulators step in.

"Advertising has accrued way too much negative baggage," Freeman said.

For Michael Barrett, CRO of Fox Interactive, the biggest component of the ad backlash is relevance.

"Our MySpace users understand that they're getting a great product for free in exchange for ads," Barrett said. "They don't have a problem with the ads themselves; they just don't like irrelevant ads."

But as MySpace gathers data on users to increase relevancy, regulators continue to ratchet up their rhetoric. According to Rothenberg, the industry faces a massive public relations crisis.

"We apologize way too much for advertising," Rothenberg said. "We wouldn't know about half the products we use if it weren't for ads. But the consumers aren't getting the message that an ad-supported internet delivers a huge value to them."

Rothenberg said the IAB has begun its own advertising campaign to educate consumers about the difference between illegal spyware and legal behavioral tracking tools. Rothenberg also said the IAB is working to highlight the benefits of an ad-supported internet such as free email, free job searches and free media.

"People take the free tools they get online for granted," Rothenberg said. "We need to make them more aware that advertising brings them their internet."