Internet Advertising: New Ways to Make Money or Promote Your Brand While Not Getting Sued Presented by:
Speaker Kari L. Moeller • Kari Moeller is Senior Counsel with Turner Broadcasting System, Inc., • Her practice covers areas such as digital and wirelessadvertising, online behavioral advertising, user-generated content, electronic commerce, consumer data collection and usage, consumer protection, privacy, and data security. • She is a member of the Interactive Advertising Bureau Legal Affairs Council and also manages the Turner Legal Department Pro Bono Program. • Her past experience at Turner also includes handling online intellectual property enforcement matters and managing Turner’s domain name portfolio, during which she was a member of the ICANN Whois Working Group.
Speaker Stephen Combs • Stephen is Director, Legal at HowStuffWorks, Inc. (www.HowStuffWorks.com), a subsidiary of Discovery Communications, LLC. His responsibilities include managing all legal issues for advertising relationships and content providers. • Formerly an attorney at Morris, Manning & Martin, LLP in the firm’s Technology Law Group, representing leading Internet companies on content licensing, advertising, privacy, and e-commerce transactions. • Corporate Counsel at Home Depot handling IT, privacy, e-commerce, and related issues for www.HomeDepot.com. • Former Co-Editor of “Law of the Internet,” a LexisNexis legal publication dedicated to Internet legal issues; Appeared on “Layman’s Lawyer,” a PBS television show on the topic of the CAN-SPAM Act.
Agenda • Categories of Advertising • Advertising Examples • Search Engine Marketing • Process and Technology • Pricing Models • Use of Intermediaries/Ad Networks • Legal Process • Privacy Issues • Legal Issues Checklist
Categories of Advertising • Display Ads • (All Types) • Search Engine Marketing • (Discussed Briefly) • Affiliate Marketing • (Not Discussed-Be Careful) • Email Marketing • (CAN-SPAM)
Search Engine Marketing (Google) • Google's AdWords • Advertisers buy search keywords and get listed as a “sponsored link.” • Note that "organic search" is the best and least expensive (free) Internet advertising. Have good content on your site, and let Google index your site. • Google's AdSense For Content (AFC) • allows advertisers to pay for ads that are served on publisher's pages with content related to your business. • Google's AdSense for Search (AFS) • is generally the same as AFC except it relates to searches on Google's site or the publisher's site. Ads are displayed alongside search results instead of content.
Process and Technology • The Parties • Ad Serving Phases • Impression Tracking Models • Publisher, 3PAS, 4PAS and Logging Process • Images Courtesy of Interactive Advertising Bureau (www.iab.net) • Used with permission. Further use, display or copying is prohibited.
The Parties • Media Company/Publisher • HSW, Turner, etc. • Ad Networks • 300 or more players • 24/7 Real Media, Yahoo/Blue Lithium, etc. • Agency for Advertiser • Lots of Agencies • Advertiser • Retailers, Manufacturers, etc.
Process and Technology • Campaign Management Systems • Solbright • Operative • Ad Server Systems • DART • ATLAS • Platform A • Analytics Systems • Omniture
Process and Technology • Publisher, 3PAS, 4PAS and Logging
Pricing Models • “Cost Per” Pricing • CPA (Cost-per-Action) • CPC (Cost-per-Customer) • CPC (Cost-per-Click) • CPL (Cost-per-Lead) • CPM (Cost-per-Thousand) • CPO (Cost-per-Order) • Sponsorships/Share of Voice • Flat Fees • Revenue Sharing on Content • % of Ad Revenue
Use of Intermediaries/Ad Networks • Intermediaries control majority of display inventory; ~30% of revenue • Much lower CPM (<$1 vs. 5x to 30x for premium/direct sales) • Benefits of using Intermediary • Lower transaction costs • Allows clearing excess remnant inventory. • Concerns for Media Companies • Brand impact to media company from low quality ads • Sales channel conflict • Price erosion
Legal Process • Review of Industry Groups • Insertion Order T&Cs • Potential Insertion Order Issues • Top 10 Gotchas for Insertion Orders
Review of Industry Groups • Interactive Advertising Bureau (IAB): • A national trade association, founded in 1996, that represents the interests of companies that engage in and support the sale of digital advertising. Its members are responsible for selling over 86% of online advertising in the United States. • American Association of Advertising Agencies (AAAA): • A national trade association, founded in 1917, that represents the interests of advertising agencies. Its membership produces approximately 80% of the total advertising volume placed by agencies nationwide. Often referred to as the “4As.” • Network Advertising Initiative (NAI) [Discussed Further in Privacy Topic] • The NAI is a cooperative of online marketing and analytics companies committed to building consumer awareness and establishing responsible business and data management practices and standards.
IAB/AAAA Terms and Conditions • Form IAB/4As Terms and Conditions • Created jointly by the IAB/4As to identify and address key issues in standard digital ad buys. • Do not fully address sponsorships and other buys involving content production or integration, but can be used as the basis for agreements covering those buys. • Where can you find them? The IAB website. • www.iab.net/media/file/standards_termsandcond2.pdf • This is the link to the official terms. • www.iab.net/media/file/standards_educationdoc2.pdf • This is the “cliff notes” version with notes from the drafting committee about the intent behind each section.
IAB/AAAA Terms and Conditions • Bonus Impressions • If Agency is using a third party server Media Company can’t bonus more than 10% over the impressions guaranteed/cap listed in the IO without prior written consent. • If Media Company does, could be responsible for charges above that 10%. • Catch-22 that sponsorships/share of voice (SOV) buys run for specified dates regardless of over-delivery, unless the IO sets a cap. • Ad Materials • Ad content must comply with site/advertising guidelines and Media Company has broad ability to pull ads (subject to make-goods). • If a campaign doesn’t start due to late creative, Media Company can charge for the wasted inventory.
IAB/AAAA Terms and Conditions • Confidentiality • The ad description and pricing are confidential. • Third Party Ad Server • Agency can track delivery through a third-party ad server. When a discrepancy occurs: • If it is 10% or less, the agency pays the invoice. • If it is more than 10%, the difference is treated as under-delivery and agency can opt to either accept a make-good or pay off the 3rd party numbers plus 10%. • Reselling • The inventory purchased can’t be resold to a third party.
IAB/AAAA Terms and Conditions • “Parole Evidence” • Only the IO sets out the contract terms. Emails or other correspondence are not binding. • Acceptance • Signing or serving the first ad impression, whichever happens first, means acceptance of the terms. • Ad Placement • Media Company must comply with any placement requirements or editorial adjacency guidelines in the IO. • Cancellation • The IO can be canceled without penalty on 30 days notice before the first impression is served and 30 days notice after the first impression is served, until a straight 14 day notice becomes the later date.
IAB/AAAA Terms and Conditions • “Without penalty” • Agency doesn’t have to pay for entire campaign – only through effective date of cancellation. • Short rates • Apply to the extent noted in the IO. • Measurement Guidelines • Provide for measurement standards and auditing process
IAB/AAAA Terms and Conditions • Measurement Guidelines • From IAB/4A T&Cs: “Media Company will make reasonable efforts to publish, and Agency shall make reasonable efforts to cause the 3rd Party Ad Server to publish, a disclosure in the form specified by the AAAA and IAB regarding their respective ad delivery measurement methodologies with regards to compliance with the IAB/AAAA Ad Measurement Guidelines.” • Sets standards for audience measurement in online ad campaigns and for ad campaign reporting (e.g., impressions, caching, and robot and spider filtering.) • Establishes auditing guidelines for how various vendors and media companies should be audited. • Measurement Guidelines can be found at http://www.iab.net/iab_products_and_industry_services/1421/1443/1455
Editorial adjacencies or other placement restrictions Exclusivity Cancellation Use of third party ad networks/servers Serving, reporting, invoicing Over-delivery or under-delivery penalties IO applies to all ad buys IO automatically renews IO that looks like it is IAB/AAAA terms, but really isn’t READ THE TERMS! Top 10 Gotchas for Insertion Orders
Key U.S. Laws Affecting Data Privacy • CAN-SPAM Act of 2003 • Children’s Online Privacy Protection Act (COPPA) • Federal and State “Do Not Call” Lists • State and Federal Consumer Protection Statutes
Privacy Issues in Ad Sales • Integrated buys w/ sweepstakes • Surveys • Landing Pages • Mobile advertising • Behavioral targeting
NAI Privacy Principles • Working with the Federal Trade Commission (FTC), the NAI created a set of self-regulatory industry standards, called the NAI Principles, that mandate how 3rd party advertising networks can use information about users. • The NAI Principles require member companies to provide notice that • Advertising networks may place a 3rd party cookie on your computer; and • Such a cookie may be used to tailor ad content both on the site you are visiting as well as other sites within that network that you may visit in the future. • Member companies must also provide a link to the NAI global opt-out page http://www.networkadvertising.org/managing/opt_out.asp
Behavioral Advertising • Nov. 2007 - FTC “Town Hall” meeting and subsequent release of draft self-regulatory principles that define “online behavioral advertising” as “the tracking of a consumer’s activities online – including the searches the consumer has conducted, the web pages visited, and the content viewed – in order to deliver advertising targeted to the individual consumer’s interests.” • 1st party v 3rd party data collection lines are blurring definitions • E.g., widgets – who is collecting the data? On what web site is it collected? • Proposed do not track list
Recent Problem Areas • Facebook Project Beacon • Negative PR + consumer backlash for program sharing and posting of behavioral tracking data • Blockbuster • Consumer sued Blockbuster over its participation in the Facebook Beacon program • Specific to video privacy law, but cogent example of why we need to consider all issues with new business methods
Recent Problem Areas/Developments • Priceline, Travelocity, Cingular Wireless • NYAG case held these three advertisers liable for where/how ads were delivered and displayed by Direct Revenue software • Advertisers required to pay fines and reform practices • Case revolves around adware, but could indicate trend of holding advertisers liable when their ads are delivered via behavioral tracking done by an ad network • Phorm (UK) / NebuAd (US) • New type of targeted ads (ISP targeted or “deep packet inspection”) • System can track every click a person makes online by collecting clicks from user’s ISP • Legal concerns with interception of users’ data without consent
Contact Information • Stephen Combs • firstname.lastname@example.org • Kari Moeller • Kar.Moeller@turner.com • Presentation will be posted at • www.technologybar.org