Copyright 2000 by Scott
Hays
Magazine: Digitrends,
2000
Topic: Online Currency
Discrepancies
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 an impression,”
says Smith from the San Francisco-based
offices of Mediasmith Inc., a former soap
factory on 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 all 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 discrepancy of less than 10
percent. Always, the problems affects
business—at Mediasmith, eight of
50 employees spend more than half their
time resolving success-measurement 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 agencies register
as an impression the moment when a banner
ad receives full exposure.
And though mere nanoseconds are involved,
these can mark the difference 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 multiple,
unrelated sites—often use ad-measuring
technologies different from those utilized
by publishers, 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
advetising 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. ”
My Family.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 demo-graphically
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 T V 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 Lights
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 A O L 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
for measuring campaign results, the industry’s
“Tower of Babel” may someday
cause damage of Biblical proportion, figuratively
speaking.