The advertising industry has had a tough time trying to convince the world that its practices do not amount to cyber stalking when a glimpse into the dark underbelly of behavioral targeting reveals otherwise.  But what’s the alternative?  Google and Mozilla recently introduced tools to enable users to opt out of ad tracking, but it essentially adds up to an honor system in which advertisers must give their word not to track people who opt out.

One social marketing company, Crowd Factory, offers an interesting alternative that eschews stalking and encourages opt-in tracking, and the company just raised a $6.5 million round of funding led by Storm Ventures.

So how exactly does opt-in tracking work?  Crowd Factory’s suite of social marketing applications will allow advertisers to create ad campaigns that are integrated with sharing widgets.  For example, an advertiser might set up an ad campaign in the form of a contest to win cookware from the Rachel Ray store. When a user clicks on the Twitter or Facebook sharing link, the link to the Rachel Ray contest is posted on their wall, and then the advertiser can track how many people return to the site, how many repost on their walls or feeds, how many are converted, and so on. 

“The number one problem for everyone is: How do we measure ROI on social?” said CEO Sanjay Dholakia in an interview with VatorNews.  “What’s unique about our technology is that it gives advertisers the ability to see social activity drive all the way down to a conversion event.”

The social sharing functionality allows users to stay in the ad experience (instead of, say, copying the link and then going to their Facebook page to post it on their wall) and an auto-generating code tracks the message and sees who comes back.  

The approach is getting some pretty solid results, according to the company.  One of their clients, an advertiser for a Fortune 50 company, tried their service and claimed to see 700% ROI and a 75% boost in traffic.

So how is it different from services like Context Optional or Buddy Media?  Dholakia described it as “fishing where the fish are.”  While Context Optional and Buddy Media provide services for building and maintaining social presences, they don’t offer anything to measure ROI.  A brand like Tide might get thousands of “likes,” but likes don’t necessarily translate to ROI. 

Dholakia came to Crowd Factory last year from Lithium Technologies, which focused on customer engagement at the website, and Dholakia said he first heard about Crowd Factory’s technology because Lithium had tried to buy the company twice.  Fast-forward a couple of years, and boom—he’s the CEO.

Today, Crowd Factory works with some 20-25 clients and has created ad campaigns for the likes of HBO, the aforementioned Rachel Ray, Sony, PRNewsWire, and more.

The funding will be used to ramp up sales and marketing.