The IAB’s Cash Infusion

The Interactive Advertising Bureau has had its ups and downs over the years. The downs have included miniscule budgets, a limited staff and reluctance among members to cooperate on industry initiatives. On the up side, the trade body has succeeded in expanding its research and events programs, adding some big publishers to its roster and finally establishing a headquarters.

The latest and most dramatic “up” for the IAB is a surprise $5.8 million “acceleration program” that’s being funded with interest-free loans from 11 member companies.

Not long ago, the IAB was of marginal importance to the sector, said Forrester Analyst Jim Nail, and he describes the loans as “a big vote of confidence, well deserved, which will help accelerate growth in online advertising.”

But what exactly is the IAB going to do with all that money? And what are the contributing members getting in exchange for the cash?

With regard to the first question, it might be easier to count what isn’t on the list of things to do with the money.

You need both hands and both feet to count the initiatives for which IAB President Greg Stuart has earmarked the funds. They include:

The widely promoted Cross Media Optimization Study (XMOS) and its seven-city road show; An expansion of the IAB’s events business; A new media credit service to check the credit of agencies and marketers; Sales training for publishers; and Further marketing efforts. The list goes on and on.

A Risk of Favoritism?

But given that the online ad sector is not traditionally inclined to think in terms of collective good, one must ask: What’s in it for the contributing member companies?

The companies’ first answer to that question is simply that the money will assist industry growth.

“We did it because we are firm believers in the Internet being an ad supported medium and a viable one for now and the foreseeable future,” said Jason Krebs, VP of ad sales for New York Times Digital (NYTD), one of the member companies to grant the IAB an interest-free loan.

Yahoo Director of Marketing Eric John said the portal contributed to the program to spread the gospel about interactive media. “Some messages are better heard from an industry group like the IAB,” he said.

However, it’s also clear the publishers and media companies behind the $5.8 million are buying a measure of influence in setting the IAB’s agenda. Stuart is planning to hold personal meetings with the members who granted loans — including America Online, MSN, Yahoo, NYTD, 24/7 Real Media, LookSmart, Wall Street Journal Online, The Walt Disney Internet Group, CNET, Overture and Google. These powwows, he said — and the companies confirm — are intended to set the initial agenda for how to spend the cash.

“We do set the agenda for that money,” stated NYTD’s Krebs.

“It’s a collaborative process,” he added. “Your voice is heard, you shape the trends of the industry, and you direct the member groups along paths that are not always to the benefit of everybody but in the larger scheme are… beneficial.”

It’s neither a secret nor a shock that the IAB’s highest-profile, highest-dues-paying members hold the top seats on its many committees, therefore shaping its goals to a large extent. But when fewer than a dozen members get to establish the course for the organization, the trade group may risk being perceived as an agent for those companies’ interests.

Of course, it all depends on the degree of their influence, and the degree to which their interests overlap with the rest of the IAB’s membership.

So here’s the question: Will this level of influence on the part of the IAB’s debtors adversely affect smaller media companies?

Krebs doubts the lower-profile online ad players will be excluded from benefit. “A rising tide lifts all boats,” he quotes.

But Stuart himself expressed worry about under-representation of small publishers: “I was concerned that we would only have the interests of the big players represented,” he said, quickly adding he feels a balance was achieved when member companies of different sizes and specialties joined the program — companies like Overture, New York Times Digital and 24/7 Real Media. These aren’t small companies by any means, but he says they diversify the pool of interests involved in the dispersal of the cash.

“The beauty of the program is that we’re very balanced: We have portals, content companies, advertisers and search engine marketers,” he said.

However, there remains a concern among some that the unique needs of small publishers must somehow be addressed.

“The IAB needs a committee of publishers that are not in the top 50,” said Karen Orton, VP of sales for ThirdAge.com, an online media company targeting adults over 45. While Orton expresses strong support for the IAB, she says low and mid-tier media companies need attention from the trade body.

The IAB has occasionally stood accused of favoritism in other areas, for example granting press registration for its events to member organizations while excluding non-members. Such behavior only serves to balkanize a sector that is struggling to present a unified front, which should be any trade body’s first order of business.

Members to whom ChannelSeven spoke put a great deal of faith in the abilities of the IAB and Stuart, its superlative salesmen, but it seems a given that a trade body should be impartial as well as effective.

Spending Wisely

The loan raises other potential concerns about fiscal management. Just how much can one relatively impoverished trade body achieve? And is it a mistake to allocate money in so many directions at once, when certain key initiatives go begging?

The IAB’s immense to-do list covers an astonishing merry-go-round of committees, councils and task forces. There’s an email committee, an agency relations council and an ad sizes task force; a Hispanic committee, a research council and a measurement task force; a search engine committee, a CMO council and — well, one could fill a whole article just listing them.

Meanwhile, some of the group’s long-established objectives haven’t done as well as one might hope. Take for example the IAB’s rich media guidelines, the second version of which languished for two years, even while industry luminaries and Stuart himself proclaimed this area the hotspot in the online ad sector.

Or take the recent refusal of AstraZeneca to release more than top-level results of research the IAB itself funded. The firm decided to keep most data private, and declined to participate in a public panel discussion of the study.

While Stuart said he was disappointed in AstraZeneca’s insistence on withholding data from the research, he’s not surprised considering the competitiveness in the pharmaceutical sector.

“I wish they had been comfortable releasing more data, but to expect that from a pharmaceutical study is unrealistic,” he said.

The Little Trade Org That Could

Despite jabs and jibes about favoritism and money management, most agree the IAB is among the notable success stories in the industry it represents. In the twenty-one months since Stuart took the reins, he’s built the association up from a staff of two with a meager $1.3 million budget to a staff of 13 with $5 million to spend annually. Membership has gone from 35 to 160, and many of the biggest players in the sector are now onboard.

Additionally, the trade group has finally established independent offices, after couch surfing around Madison Ave. for a year-and-a-half. (It was based first out of StudioOne’s offices, then later out of Google’s and CNET’s digs.)

Certainly the IAB and its president have grappled with demons, but among the group’s members are fewer detractors than there once were.

“They were on the brink of irrelevancy,” said Forrester’s Nail. “But with all the work they’ve done on the [XMOS] media studies, best practices and at the grassroots level, they’re really making some progress.”

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