February 20, 2002 1:15 PM PST
The battle over getting to know you
The fight is playing out in almost weekly meetings staged by the Interactive Advertising Bureau (IAB), the trade group of the roughly $7 billion online ad market. The IAB is hosting working groups to define new terms and conditions for interactive ad contracts, with the goal of simplifying the process for publishers and advertisers.
Those participating in the meetings are top executives at Internet companies including Yahoo, America Online and Walt Disney; agencies including Modem Media, Ogilvy & Mather and Foote, Cone & Belding; and associations such as the American Association of Advertising Agencies.
Executives familiar with the negotiations say that while many of the terms and conditions have been set, issues surrounding data collection are still on the table and are causing friction. At the heart of the argument is language in the contracts that assigns ownership of ad-campaign data--excluding personally identifiable information, which is typically protected in privacy policies--to both advertiser and publisher.
"It's pretty contentious," said Jim Spaeth, president of the New York-based Advertising Research Foundation. "There isn't a lot of history we can rely on here. The fact that people are battling over it suggests the data is valuable and it is fundamental to the value proposition of the online media."
Web publishers have long used "cookies," or electronic tracking tags, to monitor visitor habits and response to advertising. Third-party ad networks and agencies do the same, creating comprehensive pictures of consumer behavior across multiple Web sites. For the first time, both sides are questioning who owns that information.
The dispute highlights the growing importance of data in the Internet Age, as advertisers and content owners increasingly assign value to it as a means to improve customer relations and ad performance. It also foreshadows potential rights issues in emerging mediums, in which cable networks, digital device manufacturers and others will be privy to information once only available to media researchers such as Nielsen Media Research.
"The big issue is the precedent we set about data and usage rights for data for evolving digital platforms like interactive TV and digital cable set-top boxes," said Adam Gerber, media director for Young & Rubicam's Digital Edge unit. "The questions are: Who gets to use the data, and how can it be used?"
According to those familiar with the negotiations, advertisers and their representative agencies are ultimately aiming to protect their investments in online media. They are questioning whether publishers should have the right to use data from individual campaigns to build collective repositories on consumer behavior. These profiles can be ammunition for publishers to better sell ads. While this can be good news for advertisers, it can also help improve a competitor's position in the marketplace.
Some online publishers are already considering ways to guard their audiences.
Forbes.com, for example, uses ad-serving technology from 24/7 Real Media called Open AdStream, which offers controls to block the settings of cookies from third-party ad servers.
"Our audience is a very hard-to-reach...executive audience. We've worked hard to build that audience," said Mike Smith, chief technology officer at Forbes.com. "What we want to prevent from happening is allowing third parties to reach our audience after engagement with Forbes.com."
He said that although the company doesn't prevent third parties from profiling its customers, it's "in the works."
The stakes are high for Internet companies such as Yahoo, which has built an advertising research division called Full Service that relies on ad intelligence to improve the effectiveness of campaigns. A host of other Internet companies, including search site LookSmart, have announced plans to resell research garnered from advertising.
Keep off our turf
For example, a reader of The New York Times online may visit a host of smaller niche sites. Through an ad network, a marketer may be able to reach that Times visitor through a site that charges much less for advertising.
Yahoo and AOL Time Warner declined to comment for this story.
In contrast, advertisers are worried that their campaign data can be pooled into research at sites such as Yahoo and can be used to bolster rivals' marketing.
For example, if a computer maker invested heavily in product ads with a Web publisher, that site may learn what kind of promotions consumers respond to, then turn around and sell that learning to a rival.
As a result, advertisers are suggesting that ad contracts restrict data rights on a case-by-case basis. They are also talking about whether commissions are appropriate if Web publishers gain financially from their campaign intelligence.
For its part, the IAB said that it is close to buttoning up its new terms and conditions. The organization issued its first-ever guidelines last March, but it has been working for some time to update the standards. The terms and conditions cover such issues as advertising placement and positioning, payment liability, cancellation policies, and privacy.
IAB Chief Executive Greg Stuart said he could not comment on the IAB's private talks, but he emphasized the importance of data in future interactive mediums.
"One of the Internet's special sauces is data," Stuart said. "Interactive is a big deal going forward because of the data...Internet measurement is already better than any other medium.
"It will certainly be increasingly valuable to the entire advertising and marketing world because it's the basis to measure return on investment. The better the data the better the return-on-investment analysis."