IAB Head: 'The Digital Advertising Industry Must Stop Having Unprotected Sex'

Randall Rothenberg is the president and CEO of the Interactive Advertising Bureau, an interactive marketing trade association that represents more than 500 digital advertising and publishing companies.

What would happen if any rubber manufacturer anywhere, no matter how new or unqualified, could, at will, inject its tires onto the assembly line on which Chrysler makes its cars? Almost immediately, the result would be a lot of dead and injured motorists, as defective tires start shredding and blowing up on the world's highways.

An analogous scenario threatens the Internet. The supply chain by which digital advertising is created, delivered, measured, and optimized is so porous and perilous that it jeopardizes consumer trust and business growth. The risk is so severe that the underlying innovativeness of the Internet itself is in danger of grinding to a halt-unless the interactive advertising industry agrees to police its own precincts and root out the malefactors.

The story of the Internet's advertising-funded influence is hidden in plain sight. Attracted by the $500 billion advertisers spend annually worldwide, this generation's Internet entrepreneurs are like the wildcatters of Texas's early oil boom - but instead of digging wells, they have deployed business concepts and programming skills to unlock those riches, unleashing much of the inventiveness that has transformed the lives of consumers and the operations of industries.

The result: More than 1 billion people globally use Facebook to share their lives with friends and family - all of it funded by advertising. Over 472 million people a day tap Google to search the world's storehouse of information-thanks to advertising. Backed by its advertisers, Twitter enables 218 million people to communicate ideas to and gather intelligence from across the globe. These and the countless ad-supported Mommy blogs, hobbyist sites, mobile apps-the sine qua nons of civilized existence - account for 3.7 percent of U.S. GDP, according to research by Harvard Business School professor John Deighton.

But like oil, advertising dollars are a finite resource, whose unfettered pursuit has grim downsides:

• Nearly one-quarter of the traffic that Internet display ads attract may be fraudulent, generated by automated programs called "bots," according to Solve Media, an Internet security company.

• Forty-six percent of online advertisements are served to websites and charged to advertisers without consumers ever having had the chance to see them, comScore reports. Non-viewable ads result when users leave a web page before an ad loads, or when consumers fail to scroll down to reach an ad below the screen line. "Pop-unders" and other shady activities also contribute to non-viewability.

• Seventy-two percent of consumers say their biggest concern about the Internet is identity theft, malware, or viruses, according to a survey just released by Zogby Analytics for the Digital Advertising Alliance.

• Advertising, much of it purchased via automated systems, inadvertently supports Web sites that deliberately steal and distribute movies, music, and other copyrighted intellectual property, leading to an untold fortune in losses annually to news and entertainment companies.

• Provoked by revelations about the ease with which the National Security Agency peers into users' digital activity, 57 percent of Internet users say they are concerned about their privacy online, according to the Omnicom Group, the world's second largest advertising agency holding company.

• Almost a third of advertisers say they are concerned about their Internet advertising appearing on sites where the content is not "brand safe," say the Online Publishers Association and the research firm Advertiser Perceptions.

Taken together, these problems account for billions of dollars in wasted money for marketers, with fraudulent traffic alone accounting for at least $6 billion annually, according to one analysis. But the actual total is undoubtedly more, because advertisers have lowered the prices they will pay for online ads, in part to offset the cost of fraud, non-viewability, and unsafe environments. This hurts legitimate publishers and innovators, even as it rewards a small number of villains.

Amid digital advertising's growth into a $40 billion industry in the U.S. and $100 billion worldwide, the industry has addressed some of these problems - such as consumer privacy, click fraud, piracy, and fraudulent traffic - aggressively, even as we dismissed many of the naysayers as self-interested fear mongers. But given the scale and potential impact of consumer and customer disaffection, we must recognize that all these nuisances are symptoms of a more destructive failing: The digital advertising supply chain is too open. It is too easy for anyone to plug in and play.

The advertising supply chain works like those underlying most other sectors. It starts with raw materials-a marketing strategy and creative ideas-and then turns them into products called ads, which are delivered to consumers. These are trafficked among the main players-advertiser, agency, online publisher, and consumer-and an array of interconnected companies: ad servers, ad verification companies, measurement vendors, data management platforms, audience buying exchanges, and more. Members of this supply chain perform their functions by placing little bits of code or text inside an ad or a Web page, invisible to the consumer, to personalize an advertisement, count it, determine whether it was clicked on, analyze its effectiveness, and to accomplish a host of other activities.

The big difference between the digital advertising supply chain and that of other industries is openness: anyone can participate. There are no overarching checks to control for quality, and no one company can see all of the entities involved in its transactions. Even if you know that your own suppliers are reliable, you can't tell whether your suppliers' suppliers are secure. And because of the interconnected nature of the web, any imperfection inserted into one site-unintentionally or deliberately, through corruption or carelessness-can damage others. On the Internet, no one may know you're a dog, as the old adage goes, but any dog can start a digital advertising company and spread its fleas to the entire industry.

It is countercultural and perhaps a little coarse to say, but the digital advertising industry must stop having unprotected sex. We need a standard-setting body, a trust monitor, to guarantee the sanctity and probity of the digital advertising supply chain.

Models already exist. The Fair Labor Association has coalesced many giant apparel makers in a worldwide effort to eliminate sweatshops. In our own industry over the past six years, the major advertising industry trade associations, representing the interests of the entire supply chain, came together to forge a lauded self-regulatory program, the Digital Advertising Alliance, to assure that consumers have the ability to protect their privacy in digital advertising environments. But we need to step up our game, and create a quality control program that covers the entire ad-supported internet.

Make no mistake: This means an industry behavior change, at an unprecedented scale.

We must create an all-inclusive program that identifies qualified participants, and commits them to good actions, guaranteed by continual monitoring and sanctions for non-compliance. We must make it clear that doing business with unqualified companies subjects customers and shareholders to undue risk. We have to be willing to call out the bad guys, and punish repeat offenders with public ostracism (and perhaps the threat of treble damages if they are sued).

At the IAB Annual Leadership Meeting on February 9-11 in Palm Desert, California, the call for more trustworthy supply chain will be heard loudly from me as well as from the leaders of the IAB Traffic of Good Intent Task Force. Businesses must have a viable way to protect their customers, and every consumer who "logs on" from any device anywhere in the world. Innovations that have improved the quality of life on a scale not seen since the industrial revolution will be stymied if the digital advertising supply chain is not fixed.