Copyright 2000 by Scott Hays
Magazine: Digitrends
Topic: The Online Ad Industry’s 'Tower of Babel’
Byline: Scott Hays

In the seven years since he founded the interactive-media agency Mediasmith Inc., David Smith has found himself embroiled in a series of "currency discrepancy" squabbles with online publishers. These typically occur at the end of an online advertising campaign, when publishers substantiate the agreed-upon currency valuation impressions, clicks, unique visitors, sales leads... whatever. Smith estimates that in three of every 10 campaigns, the numbers compiled by publishers are off by greater than 10 percent sometimes as much as 50 percent - when compared to the figures his company collects on its own or through a third-party ad server.

"There's been this ongoing disagreement between buyers and sellers on the issue of impressions served because the two sides can't seem to agree on the valuation of an impression - or even the definition of impression," says Smith from the San Francisco-based offices of Mediasmith Inc., a former soap factory 18th and De Haro Street that's near impossible to describe quite right, but looks incredibly wired and ultra-modern. "The reality is we have a Tower of Babel, and we spend too much time on proof- of-performance issues. The problem becomes even more complicated when sellers and buyers use different technology.

"Until we end up with some sort of standard, the equivalent of the Nielsen ratings in television - with its faults, and room for wiggle - we'll continue to spend an incredible amount of time resolving discrepancy issues, rather than trying to move business ahead."

Leaving the Station
Advertising on the Web wasn't even being measured when Smith started Mediasmith. Today, hundreds of millions of online dollars depend on online buyers and sellers arriving at apples-to-apples comparisons in online advertising campaigns. A few choose to ignore the problem, suspend disbelief. Others agree to disagree, and compromise on a figure that's "fair," usually a discrep-ancy of less than 10 percent. Always, the problems affects business - at Mediasmith, eight of 50 employees spend more than half their time resolving success-meas-urement issues.

The Web auditing industry continues to define itself, and has yet to arrive at standard, shared understandings of such basic industry terms as "click-through" and "impression." When discussing the definition of an impression, for example, Smith likes to use the analogy of a train leaving the station. When, exactly, does a train "leave"? When the word comes from the tower for the engine to move? Or when the caboose finally clears the platform?

Likewise, when exactly is an impression served? Some publishers define an impression as when the page fully loads, and the ad is requested. Most agen-cies register as an impression the moment when a banner ad receives full exposure. And though mere nanoseconds are involved, these can mark the differ-ence between who gets paid, and when, and for what.

And building confidence in the count isn't the only hurdle. Third-party ad servers - the basis for any product that evaluates advertising across mul-tiple, unrelated sites - often use ad-measuring technologies different from those utilized by pub-lishers, yielding different results. "We represent the advertisers, and we believe they should get what they paid for with regards to impressions served," says Anna Collins, vice president of media for third-party ad server Avenue A. "Advertisers are looking for effective advertising and they're looking for a consistent counting method. As long as we use our counting methods and share these numbers with publishers, we feel we're getting closer to the goal of delivering accountable adver-tising for our clients."

'Reasonable' Rules of Engagement
Across the railroad tracks on Howard Street in San Francisco, MyFamily.com advertising sales director Richard Johnson acknowledges the debate between online media buyers and sellers over currency discrepancies. "It's really about trying to get the most bang for your buck, and there's nothing wrong with that," Johnson says. "But whether it's the technology or how impressions are defined and measured, buyers and sellers can't seem to agree on a solution that keeps everyone happy."

MyFamily.com is an online community for families that consistently ranks among the top 20 sites for page views by Nielsen//NetRatings. There, discrepancies less than 10 percent are typically considered a wash, while greater discrepancies require the fine art of compromise. "As long as you pre-establish reasonable rules of engagement prior to the business relationship," says Johnson. "problems between buyers and sellers shouldn't surface."

Yet pre-established rules of engagement can often give an advantage to one side over the other. For example, a small, struggling publisher grudgingly accepts the terms and conditions of a large-volume online advertising agency, and its recommendation for a third-party ad server, primarily because the publisher needs the business. A larger publisher, like AOL or Yahoo!, may not, primarily because everyone's already scrambling to advertise on their sites, so why acquiesce to the demands of a little old online ad agency?

Not a few companies end up signing on to discrepancy agreements just to avoid petty squabbles, says William G. Smith, northwest advertising manager for salon.com, a larger online publisher with 12 demographically specific editorial sites. "We have some ad agencies that refuse to sign our terms and conditions," he admits, "and in those cases we discuss where exactly they're uncomfortable, and then we get in writing some `reasonable' compromise."

Apples to Apples Comparisons
So why can't buyers and sellers agree on a "reasonable"
formula that works for both sides?

While the TV industry has settled on the A.C. Nielsen ratings as barometers for American viewing patterns, the Internet has yet to agree on a single method for measuring its audience. And given the struggle to compare apples to apples, buyers and sellers may never see eye to eye, as long as measuring campaign results remains an adversarial process-my numbers versus your numbers.

"Most of the problems arise when you throw a third-party ad server into the mix," maintains Nick Centofante, media director for Pennsylvania's U.S. Interactive, "because some publishers won't accept third-party numbers. But third-party ad servers make our jobs a lot easier.

"I think it's a matter of working these things out, explaining to your client that this is the Internet business and discrepancies are going to happen," says Centofante. "And then it comes down to the relationship you have with a particular publisher." Says U.S. Interactive purchases a million impressions with Publisher A, but the response rates are so below projections the client is disappointed. Through its relationship with the site, U.S. Interactive could theoretically negotiate for bonus deliver to account for the low performance, or run the campaign for another couple of weeks on good faith.

Working for an online publisher, Smith with salon.com takes a slightly different tack. "In most cases, we end up over-delivering our agreed upon currency valuations," he says. "If we find that we have under-delivered on a particular campaign, we are more than willing to give the client a make-good, rather than jeopardize the relationship. However, even that becomes problematic when you don't have the impressions to give because the site's completely sold."

Says Smith with Mediasmith: "From an agency's perspective, we feel publishers need to be more concerned about whether the advertising campaign works effectively for the advertiser. If it doesn't, publishers won't get renewals and they'll soon be out of business. Sites will only make money long-term if they help advertisers maximize their return on online dollars spent, and this starts with the basics for counting. We need more information from some of the bigger publishers about why their data is often dramatically different from our own. This is a big issue, and we need to get the big players from both sides at the same table."

In Search of Bright Lines
Though there are no bright-light standards agreed upon by media buyers or sellers, or even third-party ad servers, a recent report of the New York City-based consulting firm Jupiter Communications suggests that agencies that serve ads themselves, or via third-party ad servers must share data with publishers to maintain good business relationships.

Meanwhile, several industry groups and/or associations have embarked on attempts to define and measure the results of online advertising campaigns. And although there's a grab bag of initiatives and/or proposals out there, each demonstrating the many intricate layers of online media buying and selling, "no one document has surfaced that the entire buying/selling community can get behind," says Brian Monahan, former director of online media buying for the San Francisco online ad agency, Exile on Seventh, and founder of the newly-formed Inrhythm Marketing, a marketing systems integrator. He complains that 50 to 85 percent of publishers' numbers never matched those Exile collected through its third-party ad server. "We spent a fairly significant amount of time just trying to resolve these issues," Monahan says.

So, several months ago at the Digitrends Media Buyers Summit in Aspen, Colorado, Monahan and several senior-level online media buyers met to discuss what they could do as a group to help simplify and standardize the online advertising industry.

"Earlier this year, publishers got more militant about requiring ad buying agencies to sign their own terms and conditions," says Monahan. "As media buyers, we've got to read these things for 15 to 20 Web sites on any given ad campaign, and they're always skewed to favor the publisher. We decided then to band together as buyers to come out with a document that adequately protects our clients' interests."

Monahan and the other media buyers want to unify the community behind "some document that everyone can live with," then open a discussion with major publishers. To that end, they produced a template unveiled during the American Association of Advertising Agencies task force meeting held in June.

"I guess if Yahoo! and AOL and some of the other larger online publishers drag their feet and get their lawyers involved, our ultimate leverage would be to have the entire buying community embargo a publisher that refuses to comply," Monahan offers.

A second group of 40 or so interactive agencies, calling itself the New Media Consortium, is also attempting to bridge the gap. "The best we can do is come up with recommended standards," says Greg Smith, former director of strategic services for Darwin Digital, facilitators of the consortium. "Sharing knowledge is always needed, and I think from what I've seen these are some of the best and brightest to come together. It's nice to see everyone headed toward a better way to conduct business."

Both the Aspen group and New Media Consortium have approached various industry associations-the Internet Advertising Bureau (IAB), the American Association of Advertising Agencies, the FAST Steering Committee to work together on the non-sexy, yet essential building blocks of how to conduct business in the online advertising world. They have not always met with enthusiasm.

"Currency discrepancy is not one of the current issues that we're addressing," says FAST chair Vivienne Bechtold. "We recognize it is one that needs to be addressed but at this time, we are focusing our effort more on barriers that are close to the heart of interactive marketing and online advertising." For example, consumer privacy, easier insertion order and new ad model guidelines, and a broad range of measurement issues.

"Until we can come up with unified terms and conditions, and get the publishers to agree, there's going to continue to be currency discrepancies and other problems that will prevent this business from being as effective as it could be," adds Smith of Mediasmith.

Slower than a K56
The Internet Advertising Bureau, in a 1997 report by The Media Measurement Task Force, stated that metrics and methodology is only a "beginning, not an end, in the essential process of establishing a viable and useful advertising currency for the World Wide Web." When buyers and sellers spend way too much time getting to the root of currency discrepancies and negotiating compromise solutions, says Patty Keegan, vice president of Carat Interactive in Boston, "these discrepancies force buyers and sellers to question the credibility of the entire medium."

It is indeed odd that, while business on the Internet moves at lightening-fast speed, attempts toward a resolution of the issue of currency discrepancies proceed slower than a K56 modem connection. Is it because online media buyers and sellers, and third-party ad servers, too often use different ad-measuring technologies solely for selfish "me and mine" benefit?

Until the day when the online ad industry voids adversarial role playing for reasoned agreement on thoughtful and exact methods to measuring campaign results, the industry's "Tower of Babel" may someday cause damage of Biblical proportion, figuratively speaking.