The Internet Advertising Bureau has come out against new guidelines proposed by the Federal Trade Commission that would require bloggers to disclose their affiliations with sponsors, marketers, and free giveaways. The reason? The IAB claims that the rules unfairly regulate online media more than offline.
"What concerns us the most in these revisions is that the Internet, the cheapest, most widely accessible communications medium ever invented, would have less freedom than other media," IAB president and CEO Randall Rothenberg wrote in an open letter to FTC chairman Jon Leibowitz. "These revisions are punitive to the online world and unfairly distinguish between the same speech, based on the medium in which it is delivered. The practices have long been afforded strong First Amendment protections in traditional media outlets, but the Commission is saying that the same speech deserves fewer Constitutional protections online."
He illustrated it with a personal example:
So there I was last Saturday, about to send out on my Twitter feed--which automatically updates my Facebook page and links to my personal blog--a photograph of this wonderful baked halibut dish I'd just made as a surprise for my wife. I was in the middle of typing a rave review of the recipe, which I'd pulled from my favorite cookbook, "Delicioso! The Regional Cooking of Spain" by Penelope Casas. But before I could press the 'post' button, I stopped and canceled the whole thing.I remembered that the book was a freebie, sent to me by an editor at the Alfred A. Knopf publishing house 13 years ago. And I didn't want you guys to haul me into court and fine me for violating the rules you've just promulgated to muzzle social media.
The FTC has said that the rules, which stipulate that violations may face up to $11,000 in fines, are designed for education rather than punishment. But Rothenberg isn't buying it.
"The Guides do allow you to pursue bloggers," he insisted. "They do hold individuals more liable than larger corporations. They do explicitly say online social media have less protection than offline corporate media. They do obstruct online companies' opportunities to drive cultural conversation more than offline companies'. They do threaten with prosecution book publishers, movie producers, and other companies that supply products to individual social media conversationalists."
The bigger problem is that offline media isn't subject to the same restrictions, he explained. And, according to the letter, clamping down on one medium but not another constitutes a First Amendment violation.
The FTC has not yet responded publicly.
Nobody's surprised: Internet-advertising revenues fell slightly in the first half of 2009, according to numbers released Monday by the Interactive Advertising Bureau and PricewaterhouseCoopers.
The trade group found that online-ad revenues dropped 5.3 percent to $10.9 billion year over year, representing a total loss of $610 million. That's an understandable loss, given how much the media business has had the wind knocked out of it, thanks to the recession. But the slide in digital advertising isn't nearly as dire, when compared to the overall ad industry, which fell 15.4 percent.
The IAB also brought up numbers from Nielsen indicating that online advertising is essentially flat--and that the only sector of the ad industry that is growing is cable television.
PwC partner David Silverman called online advertising "a vibrant, sustainable industry," and he reiterated that it's an "industry that really didn't exist more than 12 years ago."
There was not much talk about social-media advertising, which has made somewhat of a breakthrough in recent months: after much criticism that it would never be able to make much money, social ads got a boost from Facebook's announcement that it had reached a cash flow-positive status several quarters earlier than expected.
The social network, which now has more than 300 million active users, has been dipping a toe into virtual-commerce revenue streams but is still supported primarily by advertising.
Social-news site Digg has ended its advertising partnership with Microsoft more than a year before the deal was set to expire. Instead of relying on Microsoft as its exclusive ad partner, Digg will now primarily use the internal sales force it recently began building; Microsoft will handle remnant inventory.
"Starting July 1, Microsoft will sell network inventory for Digg through the Microsoft Media Network, which it has been doing successfully for the last year and a half," a statement from Microsoft read. "Digg has created its own internal sales executive team, and we respect their decision to sell their owned-and-operated site inventory directly to help further accelerate their growth as a company."
Digg's contract with Microsoft, intended to be a three-year deal, started in mid-2007, when the company chose it over Google. At the time, founder Kevin Rose applauded the decision because it would let Digg's employees focus on feature development while leaving ad sales to a more experienced team.
The revised contract is a blow to Microsoft, which touted the Digg deal as a big victory at its debut. But it also is yet another signal that advertising on the Web is changing significantly.
According to a ClickZ report, Digg's internal sales team will focus on "custom, non-IAB (Internet Advertising Bureau) inventory combined with standardized banner ads." This strategic decision--to move away from a reliance on the traditional IAB display units that have defined digital advertising for years--comes at a time when the best way to advertise on a social-media site is a matter of debate and uncertainty.
Social network Facebook also has a display ad contract with Microsoft (in addition to a $240 million investment) but has been putting more emphasis on the experimental "Engagement Ads" product that it packages and markets in-house. The News Corp.-owned MySpace, meanwhile, relies more heavily on traditional display ads.
By most accounts, MySpace is ahead of Facebook in the monetization game. It has a bigger foothold in the United States, where ad dollars are easier to come by than overseas, and it's willing to make advertising significantly more pervasive with full-page "wrap" campaigns--not to mention the fact that it has News Corp.'s media connections.
But with Digg choosing to go the Facebook route (sort of), especially given the bleak advertising climate, this could be a sign that more players in the tech industry have started to regard the next generation of digital ads as a more profitable route.
"It's not unusual for someone in the social media space to have a lot of custom units, because they're forging new territory," said Debra Williamson, a senior analyst at eMarketer. "A lot of people say that by the time the IAB comes out with a standard, the ad format is, (while) not necessarily passe, certainly not the cutting edge."
Williamson noted that not only is Digg changing its ad focus, it's looking to make new hires to expand its team. "That does put a stake in the ground, and it does say that a company like Digg is serious about looking beyond the banner, so as to speak, that they're really looking to develop new ways of advertising and that they're looking to bring on new people to help them do that."
Whether or not Madison Avenue will agree is a different story.
This post was expanded at 1:15 p.m. PT.
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