The Interactive Advertising Bureau Challenges comScore and Nielsen//NetRatings in Open Letter

The Interactive Advertising Bureau Challenges comScore and Nielsen//NetRatings in Open Letter

Demands Third-Party Audit of Methods That Count the Size of Web Audiences

The Interactive Advertising Bureau announced today that it has sent a letter to the two major Internet audience measurement services, comScore, Inc. and Nielsen//NetRatings (NNR), to submit to a third-party audit of their measurement processes.

The goal of the IAB and the entire Interactive industry is simple: to achieve transparency in audience counts and to revise out-of-date methodologies.

For the Interactive industry, one that is committed to delivering accountability, integrity in audience measurement is a fundamental necessity. But, despite a multiplicity of reported discrepancies in audience measurements, comScore and NNR each has resisted numerous requests for audits by the IAB and the Media Ratings Council since 1999.

In order to establish the source of these discrepancies, and to find the potential solutions, the IAB is asking that both comScore and NNR obtain audits of their technologies and processes by the Media Rating Council (MRC).

The discrepancies exist between the audience measurements of comScore and NNR and those of the server logs of the IAB’s own members. Further compounding these differences are the disparities between comScore’s and NNR’s own measurement results. All measurement companies that report audience metrics have a material impact on interactive marketing and decision-making. Therefore, transparency into these methodologies is critical to maintaining advertisers’ confidence in interactive, particularly now, as marketers allocate more budget to the platform.

Without these audits, the industry has no way of knowing whether these deviations in measurement result from inconsistent counting or from outdated measurement methodologies, such as the panels developed in the 1930s and still relied on today.

“To persist in using panels that potentially undercount or ignore the diverse populations that are the future of consumer marketing is to deny marketers the insights they need to build their businesses,” writes IAB President and CEO Randall Rothenberg in an open letter to Magid M. Abraham, the President and CEO of comScore, Inc., and William Pulver, the President and CEO Nielsen//NetRatings. “And it certainly appears to us as if these audiences are being undercounted or disregarded.”

The IAB is the trade association representing Interactive media companies in the United States. Its 332 members account for 86 percent of the nation’s interactive advertising spend, according to research by PriceWaterhouseCoopers.

Other industry voices are also adding their concern. “I applaud the interactive industry’s commitment to transparency,” says Bob Liodice, President & CEO, Association of National Advertisers. “And I support any initiative that moves us closer to the real answers marketers need.”

In recent months the audience rating services have come under increasing scrutiny, as major consumer and business-to-business marketers allocate more attention and budget to interactive media, only to find discrepancies between the estimates offered by and between comScore and NNR, and the counts provided by the interactive media companies, based on the traffic tallied by their server logs.

The MRC was established by Congress in the early 1960s to oversee the establishment and administration of minimum standards for rating operations; the accreditation of rating services on the basis of information submitted by such services; and auditing, through independent CPA firms, of the activities of the rating services. Together the MRC and the Interactive Advertising Bureau have developed guidelines for counting ad impressions which can be used in the auditing of advertising technologies and processes used by interactive media companies, agencies and third parties.

Independently audited methodologies and numbers, Mr. Rothenberg writes, “would let marketers eliminate waste, media companies realize a fair price, and advertising agencies target audiences and analyze their campaigns more effectively.”

About the IAB:

Founded in 1996, the Interactive Advertising Bureau (IAB) represents over 300 leading interactive companies that are actively engaged in, and support the sale of Interactive advertising. IAB members are responsible for selling over 86% of online advertising in the United States. On behalf of its members, the IAB evaluates and recommends standards and practices, fields Interactive effectiveness research and educates the advertising industry regarding the use of interactive advertising. For more information, please visit www.iab.net.
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April 19, 2007

Magid M. Abraham, President & CEO
comScore, Inc.
11465 Sunset Hills Road
Suite 200
Reston, VA 20190

William Pulver, President & CEO
Nielsen//NetRatings
120 West 45th St., 35th Fl.
New York, NY 10036

Dear Dr. Abraham and Mr. Pulver:

On behalf of the Interactive Advertising Bureau, I would like to
invite you to a summit meeting with the IAB’s Board of Directors on
interactive audience measurement. We haven’t scheduled this meeting;
we are willing to hold it at any time and any place that is convenient
for you both. But we would like to convene it as soon as possible,
because the matter is urgent: the ability of digital media – which is
to say all media – to achieve our customers’ goal of true
accountability.

At this summit – if not before — we are seeking your agreement to a
near-term timetable for independent audits and accreditations of your
companies’ interactive-audience measurement processes. We also hope to
open a dialogue with you about assuring the integrity of audience
measurement systems and processes as interactive technologies continue
to evolve.

In taking leadership of the IAB after seven years at a global
management consulting firm, I wasn’t surprised to learn that some of
the issues I once covered as a media and marketing reporter still are
front-and-center for our extended industry. Buyers, sellers,
intermediaries and service providers always will debate why people
buy, what engages them and how, and the power of brand versus price,
among other topics. But I was rather startled to discover that one
issue the Internet was built to resolve remains a burning platform, 70
years after marketers and media companies first lit the match. That
issue is audience measurement.

The promise of the Internet has always been its ability to tell, to a
high degree of certitude, how many people are coming to, perusing, and
engaging with a media outlet. After decades of media research
methodologies premised on early 20th century innovations in
statistical sampling of barley yields, we could at last move beyond
projections, and into a census-based universe that would let marketers
eliminate waste, media companies realize a fair price, and advertising
agencies target audiences and analyze their campaigns more
effectively.

To be sure, sample-based research built the media industry as we know
it. Our great broadcasters, magazine companies, and newspapers, as
well as the giant consumer brands that depended on them to reach
audiences, derived from the small panels of Americans who allowed
their TV sets to be wired, filled in diaries, or sent prepaid
postcards listing their preferences back to the research firms in the
Princeton-New York corridor. But an exact count – that was marketing’s
Holy Grail, and the Internet put it within reach. If you’ll forgive me
the transgression of quoting myself, I noted the potential in a 1998
Wired magazine article: “The new media technologies, by drastically
reducing production and distribution costs and making possible almost
continual and instantaneous refinements in message, promise to
increase the efficiency of accountable advertising so that its
widespread adoption, not as an ancillary medium but as the primary
communications choice, becomes inescapable… The spurious distinction
between image advertising and retail advertising will erode, then
disappear, as each advertisement, every product placement, all
editorial can be tied to transactions.”

Imagine my surprise when I came to the IAB and discovered that the
main audience measurement companies are still relying on panels – a
media-measurement technique invented for the radio industry exactly
seven decades ago- to quantify the Internet.

As the son of a lifelong researcher (a former head of the New York
chapter of the American Marketing Association), I am sophisticated
enough to know that panel methodologies will remain important. Still,
it is incumbent on all of us in the marketing-media value chain to
come as close as we can to the ideal of true accountability. To
continue to close the gap between sample and census requires dialogue,
collaboration, and auditing according to a set of independent,
transparent standards.

By reaching for the goal of true accountability, we can help marketers
unlock their own growth potential. The era of mass media
(and mass-media measurement methodologies) excluded populations that
appeared too difficult to reach, or too cost-ineffective for main
media to count — hence, the battles that have waged for years between
media and research companies over the dilemma of counting college
students, men in bars, out-of-home Mom’s, ethnic minorities, or adults
at work. The glory of interactive media is they make it easy to
assemble, count, and assess the marketing value of these and myriad
other niche populations – and aggregate these niche populations into
effective and efficient media plans. To persist in using panels that
undercount or ignore the diverse populations that are the future of
consumer marketing is to deny marketers the insights they need to
build their businesses. And it certainly appears to us as if they are
being undercounted or disregarded, for our members’ server logs
continue to diverge starkly from your companies’ sample-based
assessments, by 2x to 3x magnitudes in some cases – far beyond any
legitimate margin of sampling error.

We in the marketing-media ecosystem have spent too many years trying
to clean up the residue of flawed media-research methodologies. We
simply cannot let the Internet, the most accountable medium ever
invented, fall into the same bad customs that have hindered older
media and angered advertisers for decades – customs such as inadequate
samples, accepted out of begrudging convenience; or phantom metrics,
like “pass-along readers,” that add shadowy bulk to audiences that
cannot be measured directly; or metering technologies and processes
that are easy to game.

The media companies that comprise the IAB represent some 86% of all
interactive advertising spend in the United States. We are a diverse
group — portals and branded publishers, ad-networks and
games-networks, mobile specialists and blogs, newspaper-founded
companies and television-founded companies — but we have in common a
commitment to accountability and transparency. Discrepancies as wide
as the ones we are seeing are unacceptable to us, and they should be
unacceptable to you and your teams.

The IAB is not asking that you accept our members’ exact counts.
Rather, we want your companies to participate in an open process aimed
at creating – forgive the mixed metaphor – a solid and transparent
foundation for audience measurement in the 21st Century. So committed
is the IAB to the establishment of fact-based interactive-media
accountability that we have delegated oversight of interactive media
metrics to the one independent body chartered by the U.S. Congress to
steward media measurement: The Media Rating Council.

As you know, the MRC was established by Congress in the early 1960s to
oversee the establishment and administration of minimum standards for
rating operations; the accreditation of rating services on the basis
of information submitted by such services; and auditing, through
independent CPA firms, of the activities of the rating services. With
the MRC, the Interactive Advertising Bureau has developed guidelines
for counting ad impressions. Together, we also have developed
procedures for the auditing of advertising technologies and processes
used by interactive media companies, agencies and third parties. Many
of the largest marketers in the United States – including BMW,
Colgate-Palmolive, Ford Motor Company, HP, ING, Kimberly-Clark, Pepsi
and Visa – have said they will require the interactive media companies
on which they advertise to provide audited numbers in 2007, and
certified numbers in 2008.

The IAB believes this request for trustworthy metrics is good for the
entire marketing-media value chain. To this end, we have asked several
times for comScore and Nielsen//NetRatings to agree to audits of your
audience measurement processes. Both your companies’ reports have a
material impact on interactive marketing and media decision-making;
transparency into your methodologies is critical to maintaining
advertisers’ confidence in interactive media, particularly now, as
marketers allocate more budget to interactive venues. Every major
advertising medium receives audited numbers from its key measurement
suppliers – but not interactive. Although I understand you have agreed
to be audited, I’m not aware that any timetables have been set.
The platform is still burning.

You can help us put out that fire. I know from my work at Booz Allen
Hamilton, which included three years of research in collaboration with
the Association of National Advertisers, that senior marketers are now
not just paying deep attention to interactive media, but are poised to
allocate significant budgets to interactive marketing campaigns. They
are attracted by the deep engagement interactive media provide, and
the true accountability we can offer. But these same senior marketers
will look with disdain at any effort to subvert that promise. Your own
growth, as well as that of our member media companies, our agency
partners, and the marketers we serve, will depend on providing
fact-based audience measurement.

So please join the IAB’s Board, the MRC, and other representatives of
the marketing, media and advertising industries whom we might
collectively engage, in a summit meeting on audience measurement. All
we ask for is a timetable by which your companies and ours can create
the audience measurement infrastructure the marketplace is now
demanding.

As do you, I revere the researchers who helped create the modern
marketing and media industries, many of whom I had the pleasure to
meet, and even befriend – people like Frank Stanton and Leo Bogart.
Let us honor their memories by building the accountable media
measurement system for which they strove.

Sincerely,

Randall Rothenberg
President & CEO

cc: O. Burtch Drake, President & CEO, American Association of
Advertising Agencies
George Ivie, Executive Director & CEO, Media Ratings Council
Robert Liodice, President & CEO, Association of National
Advertisers
Contacts

Interactive Advertising Bureau
Marla Nitke, 212-380-4714
Marketing Communications Director
marla {at} iab(.)net