Reporting Discrepancies Still Major Issue, Despite Standard Terms and Conditions

Even after major industry groups have settled on standard terms and conditions, one of the most contentious issues still faces the online media world; and it boils down to a simple question: how do you define an impression?

Confusion over the answer, say industry leaders, has caused a whole lot of trouble for Internet advertising. In fact, online advertising’s main players say that until they’ve ironed out differences among publishers, buyers and third-party ad servers, the long-term growth of the industry will be stymied.

The issue arises because of the fact that different parties involved in the Internet advertising process often come up with varying counts for the number of impressions served in a campaign, mostly because of the different methods and technologies they’re using to measure that impression. Of course, when you’re buying or selling a certain number of impressions — and there’s disagreement as to whether they’ve been delivered — there’s a serious problem.

“We’ve got to solve this problem and solve it fast,” said Mike Donahue, executive vice president at the American Association for Advertising Agencies. “Internet advertising is a valuable part of the whole communications mix. If there is frustration — let alone disagreement — as to how you measure this stuff, some people are not going to put money into it, and Internet publishers can’t afford that right now.”

It’s for that reason that many industry groups — like the Internet Advertising Bureau, the AAAA, and media buying association The Aspen Group — are making the issue their top priority as of late. Major Association of National Advertisers members that advertise online are also getting involved in high-level discussions for the first time, sources say.

The renewed resolve comes just weeks after the IAB and AAAA released recommended Terms and Conditions for sales agreements between media buyers and Web publishers. While those T&Cs laid down the law on several annoying issues, they didn’t address third-party ad serving and reporting discrepancies. However, Donahue said the subject needs a lot of special attention, considering the industry’s financial troubles.

“We need to get on it and reconcile it as soon as we can, especially given what’s going on in the digital space these days,” he said.

At the heart of this contentious and increasingly critical issue are the different ways that publishers and third-party ad servers define an impression.

For their part, publishers often count a page views or “ad insertions” as impression. An ad insertion occurs when the publisher’s Web server requests the code for an ad from the publisher’s ad management server. The ad management server — used when publishers rotate ads within their site — records an impression and calls for an ad, either from the publisher’s own server, or from a third party.

Slightly different is a method used by Engage and other ad networks: “302 Redirect,” which counts an impression as when a user’s Web browser requests a banner from an ad “counting server” as the Web page is building. The counting server notches an impression, then redirects the browser to an image server.

Another method is “ad request”, which is counted as the request for the actual ad image is made. Still another method counts an impression as when the image is fully loaded in the browser — a method favored by firms including Solbright.

Although these requests and deliveries of images happen very rapidly, there’s still a possibility that an ad will be requested but not actually delivered or loaded. For example, a user may click away from the site, or stop a page before it’s loaded. Even if a user doesn’t abort the process, the more steps that are required, the more likely it is that something goes wrong along the way.

“In terms of counting discrepancies, it’s tough to implement a standard until you have a standard agreement about what an ad impression is,” said Avenue A media operations manager Matt Greitzer. “And people will argue that with you. And, there’s a large number of off-the-shelf ad serving software out there that runs on all different hardware, platforms, and servers that makes it even tougher to decide on a standard.”

Andy Ellenthal, who is national sales director for DoubleClick’s ad server, DART for Advertisers, echoes many when he says that a lack of accounting standards are a serious check on the industry’s growth.

“It comes back to people who really don’t understand the details of the issue, or who aren’t as well versed in it, but who are evaluating a company’s spending of online media,” he said. “They look at these reports and see this as a giant red flag, when the publisher’s saying one thing, and advertisers say another.”

Indeed, it’s essentially because of the industry’s flagging revenues — and its need to attract offline clients — that accounting has become so much of an immediate priority. These traditional advertisers — whose dollars are already tighter because of tough economic times — don’t need much of an excuse to make their media buys elsewhere, so Internet advertising players are scrambling to remove any stumbling blocks to online spending.

In the meantime, companies have been using their own methods to work out the discrepancies. Some publishers, for example, may routinely allocate more impressions to campaigns than the amount stated in the contract.

Other firms are looking toward a technical solution. DoubleClick, for instance, has a team of about 30 engineers dedicated to resolving discrepancies, according to Ellenthal. It also has a small Client Advisory Group that works with the largest publishers to find technological or procedural workarounds for discrepancies, and certifies publishers once they’ve made the systems compatible.

And until the situation gets better, Ellenthal said he finds himself simply trying to explain to advertisers why the discrepancies arise.

“A significant portion of my job is spent talking to large media buyers and large online advertisers, and talking about why this happens and what we’re doing about it, and what the industry’s doing about it,” he said. “If those are the people controlling the budgets, they really need to understand the issue. And until it’s a non-issue, it’s going to be an educational process.”

DoubleClick’s not alone in the effort. Many firms have adopted similar procedures — allocating funds and resources specifically to the resolving the issue. And although most won’t disclose the amount they’re spending to resolve discrepancies, a source close to a major interactive agency said it spends $250,000 annually on the issue.

“We have situations where we have departments devoted to nothing but resolving discrepancies,” said Mediasmith’s Dave Smith. “This has got to go away. There’s got to be an easier and more efficient way to do business.”

Smith, a principal at San Francisco-based Mediasmith, has been one of those involved with the situation for some time. His company recently released its own additions to the IAB/AAAA terms and conditions — additions that come down firmly on the third-party ad servers’ side.

For instance, his recommended T&Cs specify that publishers accept third-party servers’ numbers — or pay for an auditor. Mediasmith also proposes that if there’s more than a 10 percent discrepancy in impressions, the publisher has to keep delivering impressions until the gap is closed to 10 percent.

Similarly, Seattle-based Avenue A generally asks its publishers to agree to go with its numbers, Greitzer said.

“Our perspective is that it’s hard to get a consistent picture of ad impression counts when you’re dealing with different software, and it’s over the Internet, which is still a new medium,” he said. “So when we go into a relationship with publishers, we often have them sign a contract that has them go with our ad serving counter.”

While the biggest publishers are typically loathe to accept such contracts, say ad servers, smaller sites do and are generally accepting of the procedure. That’s in part because most of the discrepancies that crop up are between 5 and 10 percent — “pretty reasonable for all involved,” Greitzer said.

But there are also those occasional times when the ad server runs into a wider discrepancy. And that’s when the trouble arises — because advertisers are looking for stability, and the same guarantees on ad delivery that print, TV and radio offer.

“In every other media, you are measuring the viewership of that ad,” Donahue added. “If you buy a TV ad and it doesn’t run, you don’t pay. Now we need to find a way to measure [online media] like that. We need to find a way to figure out what gets there and what doesn’t. It’s clearly a stumbling block, and it’s a frustrating experience for all of us.”

In some ways, though, online media is being held to a higher standard because it is technologically possible to measure the delivery. After all, it isn’t possible to determine whether a magazine or newspaper reader actually flips past the page that contains the ad. But, because the measurement can be done, advertisers and agencies demand that it be done.

Media buyers are “approaching this from what agencies need,” said Smith. “Agencies approach it from what advertisers want. And sites need to deliver what advertisers want … if they want to stay in the game.”