FTC decides on a double standard for citizen journalists

As widely reported (but mostly slept-through) the FTC issued guidelines on October 5th subjecting bloggers to endorsement and testimonial rules that are different from traditional media. The IAB and it’s CEO, Randall Rothenberg, responded today (see links below).

Rothenberg’s open letter to FTC Chairman on his clog, quotes the FTC report, which says:

…that bloggers may be subject to different disclosure requirements than reviewers in traditional media. In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e., where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages. Accordingly, such reviews are not “endorsements” within the meaning of the Guides…

Never mind the financial pressures that traditional media is under that might tempt them to say a few kinds words about their sponsors. We accept that the Captains of traditional journalistic integrity will go down with the ships without uttering a false endorsement. 

Double standards are just wrong, however, as Rothenberg and the IAB fairly point out.

Twitter your Congressman.

Randall Rothenberg’s Clog

IAB release.

Who is Louie Volpe?

 

Who is Louie Volpe?

Type the word “holiday” into almost any search engine and “Holidays.net” emerges as the top return on a list of results 100,000,000 to 200,000,000 long. Founder Louie Volpe has been the owner and proprietor of Holidays.net for over 15 years and in that time the web site has paid the rent, put his children through college and employed people in addition to himself. It began as a simple side-line venture to his early web development business. Today, it’s what Louie does, and he has been supported by advertisers from all over the world keen to reach people when they are planning for the holidays – something people do, yes, all over the world.

This week the IAB released the results of a study by two Harvard Business School professors showing the deep roots the Internet has sunk into the U.S. economy and the contribution it now makes to not only users, but thousands of small business people. As a Company with deep roots of our own going back to the commercial beginnings of the Internet, we can confirm that the lives of countless people, like Louie Volpe, have been supported by the growth of this remarkable media industry, thanks largely to revenues derived from advertising.

Once upon a time it was mostly a pipe dream for most of the publishers that Burst, and others, support to leave their day jobs and pursue a small business career that might be attached to their personal interests and passions. Today, many publishers have done just that, like Louie Volpe.

The IAB’s research is aimed, in part, at interest groups trying to prevail on government to regulate the Internet economy with privacy legislation that would knee-cap online advertising. The closer we get to the issues as an industry the more we realize that there is a gross misunderstanding of how online advertising works among the people setting the tone of the discussion.

Online advertising is anonymous, anonymous in the way that newspaper and cable subscriptions are not. No names. No addresses. No people at the other end that can be recognized.

Except Louie Volpe and many thousands more like him who create the rich fabric of the Internet on which people have come to depend, all over the world. These people need to be recognized by everyone in this discussion.

Here is the release announcing the IAB’s report:

WASHINGTON, D.C. (June 10, 2009) – Interactive advertising is responsible for $300 billion of economic activity in the U.S., according to a new study released today by the Interactive Advertising Bureau (IAB). The advertising-supported Internet represents 2.1% of the total U.S. gross domestic product (GDP). It directly employs more than 1.2 million Americans with above-average wages in jobs that did not exist two decades ago, and another 1.9 million people work to support those with directly Internet-related jobs. A total of 3.1 million Americans are employed thanks to the interactive ecosystem. These are the key findings of the first-ever research to analyze the economic importance, as well as the social benefits, of the Internet.

The study, commissioned by the IAB was produced by Harvard Business School professors John Deighton and John Quelch, along with Cambridge, MA-based Hamilton Consultants. The study was designed to provide an impartial and comprehensive review of the entire Internet economy and answer questions about its size, what comprises it, and the economic and social benefits Americans derive from it.

“This is the first time anyone has undertaken a comprehensive analysis of the size and scope of the Internet economy and measurement of its economic and social benefits,” said Professor Deighton, the Harold M. Brierley Professor of Business Administration at Harvard Business School, and an author of the study. “I am convinced the results of this study will prove useful for business leaders, legislators and the educational community.”

“This study underscores that the Internet ecosystem is generating an increasing level of economic activity in every corner of the nation,”said Professor Quelch, the Lincoln Filene Professor of Business Administration at Harvard Business School and a co-author of the study.

The study looks at the entire interactive marketing ecosystem, which includes:

The ad-supported Internet, narrowly defined as the content and usage supported by an estimated $23.4 billion of Internet advertising in 2008

E-commerce

E-mail, the cornerstone of lead generation and customer care for many companies

Enterprise websites, the Web sites that businesses, large and small, develop and maintain for communication.

Among some of the other important findings:

Small businesses have thrived as a result of the Internet:

• There are more than 20,000 Internet-related small businesses in the U.S. that provide a variety of services such as web hosting, ISP services, web design, publishing, and Internet-based software consulting. Many of these businesses have 10 or fewer employees.

Internet-related employment is particularly important to certain areas of the country but exists in every one of the 435 U.S. Congressional Districts. Some Congressional Districts have more than 6,000 Internet-related employees.

Interactive advertising has substantially reduced what consumers have to pay for access to the Internet and for e-commerce products and services. In addition to its financial contribution to the U.S. economy, the Internet has produced large social consequences as an infrastructure and platform, providing American society comprehensive qualitative benefits that include:

•  Universal access to an almost unlimited source of information
• Increased productivity (output per unit of capital or labor, or increased consumer utility at a lower cost)
• Innovation in business practices, consumer behavior, commerce and media
• Empowerment of entrepreneurs to start small businesses, find customers and grow
• Environmental benefits derived from saving natural resources lowering pollution through the reduced use of petroleum-based fuels and paper

“The results of this study confirm the vast influence and driving importance of the ad-supported Internet to the overall economy,” said Randall Rothenberg, President and CEO, IAB. “By understanding the total contribution of the Internet to the U.S. economy, we can more accurately assess the impact of potential legislative changes on the Internet’s operations, particularly the consequences of any actions that would alter ad-supported business models.”

The research divided the Internet ecosystem into 14 different types of companies:

• Internet service providers (ISPs)
• Hardware providers
• IT consulting and solutions companies
• Software companies
• Web hosting and content management companies
• Search engines and portals
• Content sites
• Software as a Service (SaaS)
• Ad agencies and support services
• Ad networks
• E-mail marketing and support
• Enterprise staffs and subcontractors responsible for Internet advertising, marketing and web design
• E-commerce companies, including physical delivery
• B2B e-commerce

To read the full study, please go to www.iab.net

Demographic and behavior targeting are just the first steps to the better media value that still awaits advertisers online.

IAB’s (consistently useful) Smartbrief pointed to an article by Ben Kunz in Business Week this week, “A Pricing Revolution Looms in Online Advertising”. It won’t be news to most of us who labor online, but for the benefit of Business Week readers Mr. Kunz’s point is that behavior and demographic targeting are making it possible for advertisers to by-pass the expensive real estate of branded web sites (“FancyOldSite.com,” as Mr. Kunz characterizes them) for the cheaper inventory of other, presumably smaller web sites brought to market by ad networks and companies such is Quantcast (a commercial partner of Burst).

Ben Kunz makes this sound like bad news. It’s not. Behavior and demographic targeting (or, “re-targeting”) rely on a fundamental of media planning passed down through the ages: observed media behavior. Observe what someone reads or views, and you can deduce the sort of person. Online, demographic or behavior targeting has been gloriously easy to scale: set cookie, set timer and serve.  Accordingly, it has also been much cheaper online, which is the effect Mr. Kunz describes.

But the process is leading us in the right direction. Advertisers have been reluctant over the years to explore the Long Tail of the Internet, except as fodder for less descriptive performance campaigns. They have huddled around FancyOldSites at the tip of the market. Now, however, increasingly accurate and meaningful forms of behavior targeting have advertisers running ads across great swaths of the Internet. So, it can’t be argued anymore that advertisers are afraid of what they don’t know about where their ads are running because their ads are probably running there already. Next, therefore, it may dawn on them that they can reliably turn to the many destinations they are already using to target not just behaviorally but in context so that their messages are cloaked in a supportive environment.

This is good news for an industry that needs good news. Why? Because if behavior is the right message to the right person, context is the right message to the right person at the right time. If behavior has been a planning fundamental down through the ages, context has been its foundation. Context has been - and is – the quarry from whence cometh the stone. Google showed us how to dig from that quarry and built a monument to The Media Ages.

FancyOldSites.com should react to Ben Kunz’s warnings in Business Week by getting into the behavior game themselves, leveraging their brand equity to develop vertical ad networks of their own that create cross-selling, behavior-type opportunites. Many are. In the process, they can help unearth – as Google did - the Internet’s essential value proposition, the one they know most about: context. Real context. Vertical niche context. Context without compromise. Exactly the right message in exactly the right place at exactly the right time, for exactly the right audience. It can be exploited just as efficiently as behavior. Indeed, advertisers are most of the way there.  And, it can be just as affordable, making it easier to by-pass the expensive media offline where – frankly – most of the media money remains.

Ad networks need to decide whether they work for publishers or advertisers

A report appearing in Editor & Publisher concerns another treatise on Ad Networks, this one emanating from Northwestern’s Media Management Center, called “Online Ad Networks: Disruption – and Opportunity – for Media Business.” Similar to the Bain report for the IAB that caused a stir last year, the Northwestern report carries a simple message: leash your ad networks. They can be great companions, but watch what you put in front of them because they will eat until they die.

The nub of the matter is an awkward paragraph deep in the report: “…the publisher’s goal is simple: make the most money possible from an ad. The network has the very same goal – for itself. And the advertiser, naturally, wants to reach a potential customer for the lowest cost possible.” The awkwardness derives from the fact that a short time ago, maybe less than six or seven years, the paragraph would have read this way: ”…the publisher’s goal is simple: make the most money possible from an ad. And the advertiser, naturally, wants to reach a potential customer for the lowest cost possible.” Now, there’s this bit in the middle about the ad network, which is crowding around the bowl, scarfing down food “for itself.”

Unfortunately, three’s a crowd, and everybody’s feeling it. Left alone on a desert island one of these three players – publisher, network or advertiser - is going to eventually get it in the neck. And you can guess which one it will be. 

Networks can’t be in business for themselves and survive: they have no proprietary audience or customers. They have to work in the interest of one constituency or the other, publisher or advertiser. If it’s the advertiser, great; bad luck for the agencies - already questioning who’s their friend and who’s their frenemy - though can ad networks become proficient across media platforms? If not, better for networks to serve Internet publishers for the reason that it results in expertise versus other media and aligns them with the object of all media desires, the audience. In that case, not ad networks, but publisher networks. We like that version here at Burst.

But, whichever, each ad network must decide whom it serves. Just pick one. Either choice gets us on our way and helps remove a significant barrier to establishing the value of online media for both buyers and sellers.

“I am the Long Tail”

In a story today about the IAB’s preparations to erect defenses against the regulatory advance of government, MediaPost featured a link to the IAB video, “I am the Long Tail” that was released at its annual meeting in Orlando three weeks ago. The video (below) is a poignant look at just a few of the people and personalities responsible for weaving together the fabric of the Internet. Without them, no Google and no Yahoo!  Without them, AOL might have remained a walled-garden with millions of subscribers.

There were probably 600 people at this years IAB Annual Meeting. We relish the idea that someday there will be thousands, such the ones in the video. Think of the Los Angeles Memorial Coliseum, or the Javits Center in New York as appropriate meeting venues. It’s a good image to conjur with legislators. And with advertisers.

Getting behind the wheel to drive

The IAB Annual Meeting that concluded yesterday in Orlando, FL., was an event with a broader agenda than just the Internet. The IAB meeting was a beginning referendum on the future of advertising. This is appropriate. After years as a smug, wise-cracking youth that was dismissive of traditional advertising and media, the Internet has it all on its shoulders now. A passing generation of media giants – magazine, newspapers and TV - is desperate for an heir. Along with everyone else, the old media guard has stood by waiting to see if the cocky self-assurance of the Internet would manifest itself in a new and improved advertising model - a one-to-one, risk free advertising model. Not yet, and despite the the bravado – or because of it – no has been quite ready to trust the Internet with the keys so that it can drive.

The Internet is in catharsis. The title of the IAB conference said it – “Brands battle back” – as did the conversations of everyone who attended and debated the art and science of persuasion. The Internet is trying to define itself in a world that needs it and that is weary of plugging holes in media buckets that have been leaking audience for 20 years. “Grow up” is all that’s left to say on the matter after 15 years of cheeky hair-dos and body art. DO something. Clean up your act.

One thing was clear from the Annual Meeting in Florida, the IAB is doing something. It has emerged as an advocate for the industry, and not just as its administrative assistant. It is leading, offering a panoramic view of the Internet landscape that shows unique form and function. It put some of that form on display with a video presentation, “I am the Long Tail“ that documented the passion of a few of the Internet’s legion of independent web publishers. It showed that it was willing to put the key issues on the table for discussion and invited provocation.

Which it got. Terance Kawaja, Managing Director of GCA Savvian Advisors, gave what may have been the most entertaining presentation during the two days, but one that was not, in the end, loaded with mirth. Terry speculated that the downward slope of prices online, brought about in part by the efficiencies of ad networks may, in fact, represent the true value of Internet advertising. Indeed, he said, it may even expose the true value of all advertising. Offering up the sins of the irrationally exuberant and sometimes fraudulent financial services industry to let us know he has walked in our footsteps and seen the way, Terry asked, what if Madison Avenue had been a giant deception for the last 100 years? What if it had perpetrated a fraud bigger than Enron, Worldcom, Stanford, Madoff and the sub-prime crisis put together by what it had charged customers to advertise over the years?

Not mirthful. Editors from the New York Times spoke after Terry and likely erased the thought that people may have been giving to what he suggested about media value over the years. They demonstrated the truly unique capabilities that only a digital medium can provide, such as their rock star graphics. But, people should pay attention because Terry’s comments, while offered tongue-in-cheek, express a true sentiment that lurks below the surface of the people sitting in judgment of our industry today, who are all members of the accounting classes. John Wanamaker was only half right, they think. In truth, it’s all wasted.

The IAB conference, therefore, was a beginning referendum on the future of advertising. In a pattern that has repeated itself since time began the next generation will have to answer for the sins and promises of its forebears and show the way forward. Just as surely this generation will stand on the shoulders of the past, and with mounting irony be called upon to rescue brand. 

It is a lot of responsibility for a 15 year old, but are we happier to have the Internet behind the wheel or television, which announced this week that it was feeling more effective than ever?

The answer is easy. Give me the keys, Dad. I’ll take us home.

IAB Annual Meeting: Brands Battle Back.

I have always been bothered by the fact that the Internet’s leading trade show is called “Ad Tech.” The name has implied from the start that the value proposition of our industry would be in the tools of our delivery, and it has led to a gum ball rally sort of race for one-to-one audience connections brought about by data and measurement. The result (no pun) today is a business heavily reliant on direct response, or performance-based advertising which is the only iteration of the advertising trade capable of holding-up the proposition.

The IAB’s annual meeting kicked-off yesterday with the theme, “Brands Battle Back”, and a call from IAB CEO Randall Rothenberg and Chairman, Wenda Harris Millard, to move beyond the immediacy of direct response and to invigorate the art, not just the science, of our business. Entering into our 15th year (roughly) as an industry, perhaps it is dawning on us, then, that our value proposition isn’t simply in the technology - any more than it is in the technology of other media. Audiences, after all, do not sink into their chairs at night to marvel at the fact that TV comes to them via a satellite in orbit over earth. Radio, still a miracle, is meaningful only if you like what’s on. Newspapers, delivered at enormous effort and expense (and also by satellite in cases), sell only if people are moved by the headlines.

The Internet is a marvel of content. Audiences respond to content. We need to sell the content. Internet content overwhelms the competition.

The IAB’s media partner for it’s annual meeting, Advertising Age, carries this story on the front page, today: “Guess which medium is as effective as ever: TV”. It sites evidence that TV advertising works and its effectiveness may be improving. The story reminds us that measurement and effectiveness as media value propositions are not unique and not high ground. If we want to challenge TVs dominant position on media plans today we must offer the chief reasons for why people would rather be online – and technology, measurement and effectiveness aren’t among them.

Time to battle back.

BPA Certifies Burst and adConductor For the Ninth Time

Today, we announced that BPA Worldwide has certified our adConductor platform for the ninth consecutive year. As the company has grown in terms of campaigns, publishers, and ads served through our ad server, we have continued to accurately report and manage our systems and our data to ensure that our results are accurate and accounted for. BPA Worldwide is the leader in media auditing, and Burst was the first online ad network to go through BPA’s rigorous auditing process. With this ninth audit we continue to adhere to this important standard to ensure that online advertisers and publishers can work with Burst Media and its divisions with the security of this audit procedure. Additionally, BPA is recognized by the IAB, meaning that Burst is an IAB Measurement Audited ad serving system.

So with all that said, why is auditing so important?  As 300 or so ad networks have emerged in the past 4 years, it has become confusing for media buyers to know who to trust. Similarly, adConductor manages online delivery for some large online ad networks that need to trust the systems they use to accurately manage and report on the complex process of distributing online ads for their own ad sellers and buyers. With 10s of billions of ad impressions riding on the adConductor platform, this ongoing recognition that we provide the proper accounting for the transactions that flow through the system helps both ad sellers and ad buyers that work with Burst and adConductor rest easy.

Online Ad Networks and the IAB/Bain Pricing Report

Here is a look at 7 online publishers and how online ad networks affect their business:

IAB/Bain Digital Pricing Study

This is interesting on two levels:

1. Clearly, there is a need for publishers to better manage the yield on their inventory. While it is still safer to let an ad impression go unmonetized than it is to let an airline seat fly empty, knowing when to make those decisions in order to maximize revenue is the next big challenge for online publishers. Very few ad servers (our AdConductor platform and 24/7 Real Media’s OAS) work for the publisher in that regard.

2. Ad networks are sopping up excess inventory. The issue though is that they are sopping it up at bargain-basement rates. Publishers need to think about the options they have for ad networks, deciding between blind and transparent networks (for the publisher to see the advertiser), those who manage block lists well, and those that will sell the value of the remnant inventory to the right advertisers to keep advertising quality high. As publishers and ad networks learn to get along better to fill excess inventory, these trade-offs will become part of the discussion of where to place great, albeit not premium, ad space.