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Net ad group to unveil new billing rules

The new guidelines to be introduced Tuesday are aimed at settling a dispute over how online ad bills are tallied, but friction remains over unresolved details.

An influential Internet advertising trade group will introduce new guidelines Tuesday aimed at settling a long-simmering dispute over the way online advertising bills are tallied, although friction over unresolved details could keep some heat on the stove for months to come.

After a two-month delay, the Interactive Advertising Bureau (IAB) said it is delivering new rules for counting ad "impressions," effectively bowing to Web advertisers that complain that publishers charge them for ads that no one ever sees. Still, backers of Tuesday's proposal say that everyone involved will benefit, since the rules may help draw reluctant ad buyers to the Web at a time when sales have been slipping.

"There is no negative about this. We're answering to God on this one, not to individual parties," said IAB interim chief Greg Stuart.

Tuesday's guidelines, originally expected in November, are part of the IAB's campaign to clean house after nearly a year of negative growth for the industry in 2001.

Along with the ad impression standards, the trade group has proposed new rules for counting Web site visitors, filtering out the effects of search engines and dealing with Web "caching." Lastly, it recommends that Web publishers fully disclose how they measure ad counts, mirroring rules in traditional media.

Next month, it hopes to put out new terms and conditions for Web advertising contracts--although some issues including data-gathering and liability standards are unresolved.

Much is riding on the outcome of these voluntary talks. According to industry veterans, some 10 percent of online advertising charges wind up in dispute--about $600 million worth in 2001, based on projected online ad sales of $6 billion to $8 billion.

Counting "impressions"
One of the major complaints among advertisers addressed in Tuesday's guidelines is the method used to count ad impressions, or the number of times an advertisement has been displayed to a potential viewer.

Publishers often count an ad impression when a line of code requesting the advertisement from a third-party ad server is sent with the delivered Web page. For a number of reasons, a requested line of code may not be displayed on a computer screen.

Conversely, advertisers, or their third-party ad networks such as DoubleClick's Dart, often count the impression only when the image itself is delivered.

The IAB is recommending that Web publishers and agencies measure an ad impression "as late as possible in the delivery process," the method preferred by most advertisers and agencies.

Another big change for some publishers is in how they count Web traffic. The IAB is asking publishers to filter non-human traffic, or traffic from spiders or robots that scour the Web continuously to update search services from the likes of Google or Yahoo. Because some publishers do not filter this traffic, it could affect their audience statistics, depending on how large their site is.

George Ivie, CEO of the Media Ratings Council, an industry association that oversaw development of the guidelines, said traffic levels could be hit anywhere from 2 percent to 10 percent based on the popularity of the site.

The standards mandate that Web publishers filter robot activity based on a list developed by ABC Interactive late last year. The regularly updated spider list is available free to IAB members or for $5,000 to nonmembers.

The standards also eliminate a method of counting unique users that tallies visitors by registering the specific computer or software copy used to access the site--usually the unique number assigned by an Internet service


Net ads and the numbers game
Greg Stuart, CEO, Interactive Advertising Bureau

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provider used to establish an Internet connection. The IAB says this method is outmoded because Internet service providers such as America Online use "dynamic Internet Protocol addresses." Since these numbers are constantly changing, the IP number is not a useful benchmark for tracking unique individuals.

"There are two acceptable methods of counting unique users: either attaching a cookie to a user or using registration techniques," Ivie said.

As a result, this standard may push more Web sites to require visitors to register before entering their site.

Cache busting
The standards also lay out ways for Web publishers to handle "caching," or the process of loading Web pages on a PC or server to save bandwidth costs.

Instead of loading a Web page each time it's requested, many company servers capture a Web page the first time it's downloaded. This allows many people in a company to view the page cost-effectively. But this makes it difficult for a publisher to track how often the ad is viewed when it could be delivered several times from the server but the Web page is counted only once.

As a result, the IAB is recommending Web publishers use "cache busting" techniques to ensure an ad and Web page are delivered each time they're requested, even if they're behind a network.

Tuesday's guidelines were developed with the help of PricewaterhouseCoopers and 11 top Web publishers and ad-serving companies: AOL Time Warner, Atlas DMT, Walt Disney Internet Group, DoubleClick, Forbes.com, MSN, New York Times Digital, Terra Lycos, Yahoo and CNET Networks, publisher of News.com. The Media Ratings Council led the industry committee in the creation of the guidelines.

Still, the change could come at a high cost for some Web publishers.

"Publishers could be looking at hundreds of thousands of dollars in changing their system and developing new code to comply with the standard," said Ivie, who nevertheless said the changes could spur more ad spending online.

The upside is "people spend money where they're confident. And right now, there are dollars out there that are not being spent on Internet advertising because of a lack of confidence in Internet measurement," he said.

Meanwhile, many IAB members are hard at work on the group's next project: establishing terms and conditions for Internet advertising contracts. So far, a few disputes have been brewing around clarifying points in the conditions, threatening short-term resolution to these standards.

The IAB's Stuart joked Monday that it will "be a cold day..." before the conditions will be finalized.

One advertising executive familiar with the process said the terms and conditions are a hot issue because there's more at stake for the publishers and advertisers. For example, one of the issues on the table is establishing liability in an instance where an advertisement is mis-delivered. For example, it is as yet unclear who would be responsible for a potential lawsuit if a disgruntled employee or hacker succeeded in getting a pornographic ad delivered to CNN's Web site.

In addition, issues have arisen around a standard for collecting data about advertisers' online campaigns. Agencies and advertisers want advertisers to have exclusive rights to data collected from a campaign and to only allow publishers such as Yahoo the right to use data at a high aggregate level. But Web publishers want to secure rights to use the data as they choose.

For now, however, the IAB is proud of its latest accomplishment.

"This is what we need to do in order to grow," Stuart said. "It's almost astounding that we got to $8 billion without this."