Results tagged “Mike Zaneis” from IABlog

We are at war.  The industry is under siege from organized criminals who proliferate malware to steal individuals’ sensitive information, turn consumers’ devices into bots that generate billions of fraudulent ad impressions and clicks, and who pirate valuable content—all for their own financial gain.  

We are also at war with ourselves.  We have created an overly complex and porous supply chain that is obfuscated from the very marketers we hope to sell to.  And, we have not shown the necessary vision and commitment to effectively fight back.  

Without trust between marketers, publishers, consumers, and the multitude of parties in between, the growth of our industry—and by extension all of the monumental innovations our industry supports—is indefinitely debilitated. As IAB President and CEO Randall Rothenberg said in a powerful call-to-action earlier this year, we need an industry-wide behavior change at an unprecedented scale.

 IAB is uniquely positioned to lead this charge. Our members have driven the advancements that created this complex supply chain and can propel the progress that will lift us out of this morass.  Success, however, will require all of you.  Only with the help and dedication of the entire advertising community will we be able to instill confidence in consumers, security in content creators, and better understanding in marketers. 

To accomplish this ambitious and essential goal, the IAB is launching a Trustworthy Digital Supply Chain Initiative, comprised of 5 distinct objectives: 

  • Eliminate Fraudulent Traffic
  • Combat Malware
  • Fight Internet Piracy
  • Promote Brand Safety through greater Transparency
  • Create Accountability

Here is the roadmap for accomplishing each objective: 

Eliminate Fraudulent Traffic

No economic model in which a significant percentage of the goods sold are fraudulent is sustainable.  We must identify bot-generated, non-human traffic and remove it from the supply chain.  The first step is to develop a common taxonomy so the entire ecosystem can speak the same language when talking about “transacting in only human traffic”.  Second, we must have a set of principles, operational and technical in nature, that help guide sellers of inventory in the identification and filtering of fraudulent activity.  Lastly, there needs to be better communication across the industry on known threat vectors and cutting edge solutions.  

IAB is currently leading the Traffic of Good Intent Task Force, which earlier this year scoped the cause and nature of this problem and produced a set of definitions. This group will soon expand upon that product with the release of new principles that establish best practices for fraud detection and set institutional limits on selling that inventory.  Following this work, the group will focus on adoption and accountability across the entire industry.

Combat Malware

Eliminating fraudulent traffic and combatting malware are two sides of the same coin. Malware is the malicious software downloaded onto consumers’ devices as they browse the web, download apps, or click on an infected link or advertisement. By decreasing the proliferation of malware the industry will create a safer, more enjoyable experience for consumers, and will help thwart the creation of botnets, which in turn create fraudulent traffic. 

To organize industry’s efforts on this front, IAB is establishing a new Malware Task Force within the Trustworthy Digital Supply Chain Initiative.  This group will create a set of high-level security principles to help companies detect malware attacks on their sites, as well as to help define technological baselines for companies to deploy against criminal activity. Malware attacks are constantly evolving, thus this group will also serve as an information sharing platform in which one company can share the latest intelligence on malware threats with other companies.  IAB will also form a partnership with law enforcement agencies to help them more effectively investigate and prosecute criminal activity.  Finally, the industry must work to plug the most commonly exploited security hole, which is outdated software on individuals’ devices.  We must educate consumers about these security risks and encourage them to update their browsers, operating systems, and other software. 

Fight Internet Piracy

Advertising revenue should never flow to criminals who steal copyrighted material and place it on “pirate” sites.  IAB and many of its members have already made strides toward this imperative through the Quality Assurance Guidelines, which include the prohibition of the sale of advertising on sites dedicated to copyright infringement. While many networks and exchanges already devote a great deal of time and resources to detecting this illegal activity, more must be done. IAB is participating in a cross-industry effort to standardize best practices and piracy detection technologies, thus making it easier for companies to double down on their existing efforts.  In addition, the Quality Assurance Guidelines program recently established a complaint system, whereby rights holders can notify networks and exchanges about potential pirate sites.  However, the process must be simpler, detection more accurate, and participation ubiquitous. And finally, marketers and agencies must build upon their own commitment to not purchase inventory on pirate sites by including this language in their contracts for every advertising campaign.

Promote Brand Safety through Increased Transparency

There is no easy way to say it, but too many marketers and agencies do not fully understand the inner workings of the digital advertising supply chain. The path an ad travels today, from insertion order to the screens of a target group of consumers, is a labyrinthine and far too opaque to the buyer. As Rothenberg said in his article, “Even if you know that your own suppliers are reliable, you can’t tell whether your suppliers’ suppliers are secure.”  Unchecked, this lack of transparency deters brand spending in our ecosystem.  To build openness, understanding and trust, sellers must continue to grow the transparency provisions contained within the Quality Assurance Guidelines—particularly in light of the rise of programmatic—and evolve the compliance program so that it governs every transaction flowing through the trusted supply chain. 

Transparency is one of the foundational goals of the Quality Assurance Guidelines. As its mission states, the Quality Assurance Guidelines aim to provide “clear, common language that describes characteristics of advertising inventory and transactions across the advertising value chain.” Already 29 top digital companies are certified under the program, with many additional leaders en route. We must continue to build out participation and increase awareness of the program amongst marketers and agencies.

Create Accountability 

Principles and guidelines are only effective when you have industry-wide adoption and compliance.  This kind of accountability ensures each participant can rely on the multitude of other actors in the supply chain to do the right thing. Without it, trust erodes. 

We have the building blocks of an industry wide compliance program in the current IAB Quality Assurance Guidelines.  To build this out to ensure a trustworthy digital supply chain, it must be expanded to cover areas such as fraud and malware and to additional areas as they arise. The compliance mechanism must be strengthened to include active monitoring systems and serious consequences for non-compliance. Last but not least, ALL actors in the digital advertising supply chain, from marketers and agencies to ad technology intermediaries and publishers, need to certify against the parts of the guidelines that are relevant to their business model.  Advertisers then must request, demand if you will, this seal of approval from those with which they buy. Only then will we have an accountability program that truly becomes the “Good Housekeeping seal of approval,” meaningfully signifying who to trust in the digital ad supply chain.   

These five discrete objectives compose a roadmap toward a more trustworthy digital supply chain, one that will increase the entire industry’s value and worth. They will be discussed in more depth at the Advertising Technology: IAB Marketplace event happening today in New York. However, it should be said, there is no such thing as a completely trustworthy supply chain. Most of our efforts are directed at fighting criminal activity, and it’s impossible to stamp out all crime. But we can implement successful programs that make it difficult for the criminals to be successful. That’s what we are doing today and we need your help to achieve our goals. 


About the Author

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Mike Zaneis

Mike Zaneis is SVP & General Counsel at the IAB.

Congress to Propose Tax on Advertising

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The economic consulting firm IHS Global Insight estimates this could place 1.7 million U.S. jobs at risk.  Today, advertising sales help support 20 million jobs, or 15% of all jobs in the country.

IAB members have no doubt been exposed to the congressional turmoil of late over budget policy in Washington.  From one debt ceiling crisis to the next, to sequestration, and a complete shutdown of the government, U.S. budget deficits are driving policy down the same road as a kicked can.Moneypie.jpg

It is widely understood that a reform of our taxation system is the first step forward to finding a long term solution for deficit reduction and economic growth.  Early last year, House Ways and Means Chairman Dave Camp (R-MI) and Senate Finance Chairman Max Baucus (D-MT) established a process to begin review of the U.S. tax code, last overhauled in 1986. 

IAB has learned Chairman Camp is prepared to formally release the Committee’s draft tax reform bill in the coming days; and, Chairman Baucus will begin briefing Committee members next week to prepare introduction shortly thereafter. 

Why does this matter to you?

Many U.S. companies have, for decades, declared advertising as an, “ordinary and necessary cost of doing business.”  Similar to employee payroll, office rent and other business expenditures, advertising is considered a standard deduction under applicable U.S. Internal Revenue Service (IRS) tax rules.  It is the unified goal of Chairmen Camp and Baucus, and many U.S. industries, to see a lowered corporate tax rate (from 35% to as low as 28%).  However, in order to accomplish a lowered overall rate, many deductions find themselves on the chopping block as “pay for’s” to offset the reduced revenue.  

Specifically, the House Ways and Means Committee has developed draft tax reform legislation that would be funded by imposing a tax on advertising. 

Today, businesses may deduct 100% of the cost of their advertising. The proposal in the Committee’s draft tax reform legislation would allow a business to deduct only 50% of its advertising costs in the year the ad runs but to delay the deduction for the remaining 50% over 10 years - thus deducting an additional 5% each of those years. The Senate Finance Committee draft is widely rumored to mirror this “Cost Recovery” bill language. 

While Leadership in both the House and Senate is not prepared to hold a vote on tax reform this year; once introduced, the draft bills will become THE base line for all future debates. 

What are the consequences?

The very real consequence of having advertising re-classified (in whole or in part) as a taxable business activity is that client advertisers will do less of it. Any tax percentage assessed will incline companies to reduce advertising and media spending in order to mitigate or off-set any tax. This impacts ad agencies directly -and can adversely affect entire local economies and job bases where agencies and advertising-related businesses play such an important role.

The proposal also does not consider that companies buy new advertising each year and would feel the brunt of this tax annually. Not only would they have less money to spend on advertising year after year, but media companies would also be impacted as advertisers would be forced to reduce their ad buys.

Consider the impact this proposal would have on the economy:

  • Employment in the ad-supported internet ecosystem doubled over the past four years to 5.1 million, making it one of the most dynamic sectors in the recessionary American economy, according to a study by researchers at the Harvard University Business School, commissioned by the Interactive Advertising Bureau (IAB). 
  • The ecosystem contributed $741 billion to the U.S. economy in 2011, close to double 2007 figures, and accounted for 5.1 percent of the U.S. gross domestic product (GDP), an uptick from 3.5 percent four years ago.

What can I do?

Begin thinking about what this change in tax code would mean to your company’s bottom line and ability to keep hiring.  Stay plugged into IAB Public Policy news and alerts; and, be prepared for a call to action.  

Please direct any and all questions to Mike Zaneis ([email protected]) or Sarah Hudgins ([email protected]) in our Washington, D.C., office.


About the Author

sp_mane_sherrill.jpg

Mike Zaneis

Mike Zaneis is SVP & General Counsel at the IAB.