The Interactive Advertising Bureau this week sent letters to the two major Internet audience measurement services, comScore and Nielsen NetRatings, asking them to submit to a third-party audit of their measurement processes.
The IAB didn’t spell out what the consequences of NOT agreeing to a third party audit would be, but they can’t be too dire, since both sides have so far resisted it, according to the IAB for over eight years.
Auditing firms usually hate being audited because their world is a series of fudges. If you’ve ever been through an audit on anything with large numbers, website visitors, magazine circulations, you will know that the team auditing you will find some records that are poorly kept, or where a mistake has been made and for each one of these it arbitrarily sets a level of certainty or uncertainty over your claims.
And given that the process of audit is what these two companies are expert in, they will know that any auditor will delight in finding anything suspect in their approach and that this will give the auditor some level of power over not only their process, but over their future costs.
Many mistakes are due to poor procedures, deliberate misreporting by someone in the chain, not to falsify figures, but to make their job easier. If people have easier jobs in audit then the cost of doing it is lower.
Giving the advertising industry a stick to beat them up with is not something that either of these businesses will be happy with. But the alternative is that they find a way for three sets of figures to add up, those from Nielsen, those from comScore and those held on the websites of the IAB members that make up around 86 per cent of internet advertising traffic.
The IAB says the idea is to achieve transparency in audience counts and to revise out-of-date methodologies. But who exactly is the expert here? comScore might have the know-how to audit Nielsen and vice versa but that’s not going to happen, and many of the decisions that need to be policed are subtle, such as when is a video advert a video advert, after it has started to stream, after it is halfway through, when the stream is complete or when a stream is complete and somebody clicks something in a certain amount of time to prove they were watching.
There are hundreds of such decisions in internet advertising audit and Nielsen and comScore are the world’s experts, so who is gong to set themselves up as more expert than either of them? And the reason this is important is because of the volumes. Internet advertising continues to rise, in the US at over 40 per cent per annum, and globally somewhat slower than that. It’s a rapid shift in the global advertising base which is already over a $20bn market. It’s tough to spend $20bn blindly without being sure that two independent measurement firms both know how many eggs make five.
Probably the IAB should not have precipitated this confrontation, but now started, and given that comScore has already replied and said it would submit to an independent audit, these entities must find a resolution to diverging advertising counts. At the moment the two market leaders in internet audience measurement will be declaring to customers that their figures are the only ones that are right and using the differences to differentiate their service offerings.
But failure to find consensus will undermine internet advertising confidence and shift money that was destined for internet usage away to more traditional media, dampening the internet effect, and that could be disastrous.
The IAB is calling for comScore and Nielsen to get audits from the Media Rating Council which was established by Congress back in the early 1960s to oversee rating operations and their audit.
One criticism is that Nielsen still relies on record keeping by humans on panels set up years ago, as one of its sources of input, which the IAB said dated back to the 1930s and is still relied upon today. The IAB is the trade association representing advertisers in the US and has 332 members.
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