Principles online advertisers can thrive by

The fastest-growing area of advertising – no surprise to anyone I am sure – is online advertising.  It transforms the way consumers and companies find and interact with one another.  It also provides advertisers with an efficient and less expensive way of reaching the consumers most interested in their products and services and gives consumers a far more useful marketing experience.  The online advertising community is working hard to implement measures to deliver these benefits in a way that respects consumers’ privacy.  And we should not forget that online advertising is the “fuel” that pays for much of the content online today.

But much like any business enjoying rapid expansion, there are growing pains.

Openness, transparency and respect for intellectual property have been critical in the development of the Internet since its inception, and respect for these principles in online advertising should be no exception.  The availability of broadband is accelerating access to a variety of creative online ad approaches.  About 63 percent of American households subscribe to broadband, up from only 55 percent in 2008.  That means that some 200 million Americans have high-speed Internet.

The impact of broadband access is breathtaking.  Today, the average US consumer spends almost as much time online as watching TV, and younger consumers (45 or younger) spend significantly more time online than in front of the TV.  It’s the obvious place for advertisers to be.  The Internet has become the third-largest advertising medium in the US, representing 17 percent of the market.

In the year of its 100th Anniversary, the Association of National Advertisers is bringing its Advertising Law & Public Policy Conference to Washington this week.  You can be sure online advertising will be a major topic of discussion, and the policy implications of the issues of most concern to advertisers will be prominent.

Chief among those issues, there is frustration among many advertisers about the lack of transparency in online advertising.  Put quite simply, advertisers want to know they are getting what they pay for.  Two practices that make many online advertisers worry that they are not getting their money’s worth are so-called “malvertising”and click fraud.  The first involves ads that appear innocuous, but in fact distribute viruses, install spyware, redirect users to rogue websites, or otherwise deceive consumers.  

The second involves sham clicks made automatically either by a software program or a person to magnify an advertiser’s pay-per-click fees.  Advertisers need to know what Internet networks are doing to investigate and stop both of these practices.

Microsoft is at the forefront of the industry in taking aggressive steps to combat malvertising and click-fraud.  For example, last June, after an intensive investigation, we brought a high-profile lawsuit against some click fraudsters that were harming some of our advertiser partners. We also recently filed civil lawsuits against several malvertisers—an industry first, to the best of our knowledge. We brought these cases without any illusion of how difficult it will be to find these bad actors or put them out of business.  But we are convinced that it’s the right thing to do. 
Openness is another key concern.  One area where advertisers need more freedom is against artificial barriers imposed by the leading online ad platform that restrict advertisers from re-using their own data as they see fit, including on competing ad platforms.  This makes it more expensive for advertisers to use multiple ad platforms, which raises costs and impedes competition.  Advertisers will need to work together to demand the right to open use of this data.

Finally, respect for IP has long been a chief concern across the entire Internet issue landscape.  One of the IP issues facing advertisers is how networks account for the use of branded terms in key word searches.  Today, many brand owners have expressed great concern that the largest ad network effectively forces them to pay to protect their own brands against use by competitors. 

While there are no easy solutions to these issues, all stakeholders in online advertising need to collaborate on viable rules of the road that work for everyone.  As long as the advertising community stands behind the need for transparency, openness and respect for IP, the great promise of innovation in online advertising can be realized.

Mary E. Snapp is Corporate Vice President and Deputy General Counsel of the Microsoft Corporation.