For the first time since 2018, the buy and the sell sides of the U.S. ad industry are updating the standard terms and conditions covering digital advertising buys. The American Association of Advertising Agencies (4As), Association of National Advertisers (ANA) and the Interactive Advertising Bureau (IAB) are organizing a joint committee that will begin meeting monthly in April to discuss and negotiate the new updated terms, which are expected to be revised by the end of 2023.
The so-called “T&Cs” -- which include the boilerplate language printed on the backs of invoices, insertion orders and other explicit contracts governing the who, what, when and where of buying, posting and paying the media for ads that are run -- were originally developed in 2001 and were updated twice previously, in 2010 and 2018.
In the past, the buy and sell sides have come together on conditions covering the major components of digital advertising buys, but historically advertisers, agencies and media sales organizations split on important components -- especially the liability of paying media when one or more entities default financially, frequently inserting their own language and clauses for it that overwrite others' terms.
The sell-side normally asserts “sole” or “joint and several” liability terms making the advertiser and/or agency either solely or jointly liable when there are financial defaults. The buy-side normally asserts “sequential” liability, meaning that whomever held the advertising funds last was liable for the payments.
Those liability terms have been further complicated in recent years by the emergence of big digital platforms like Google and Meta, which often utilize automated, self-service interfaces requiring all media buys to be paid when executed, reducing agency or client “float,” but also effectively removing any seller liability.
Those relationships were further complicated by early corporate deals struck by big agency holding companies and the big platforms that essentially treat agencies as “principles,” not “agents” in media buys -- meaning the agencies are on the hook for all payments, regardless of which clients are in default.
This morning’s announcement does not address what explicit T&Cs are expected to be updated, but IAB Vice President-Measurement, Addressability & Data Center Angelina Eng answered several question posed by MediaPost.
MediaPost: Who is on the committee (or at least, what types of execs)?
Eng: Executives involved in the negotiation, drafting, approving and/or signing contracts for the purchase or sale of digital advertising. This typically includes executives in media planning & buying, sales & revenue, account / client services, ad operations, legal, compliance, finance, and accounting. It will include all facets of the industry including publishers, brands, agencies, and ad tech.
MediaPost: What areas of the existing T&Cs require the most revisionary attention and why?
Eng: The IAB/4A’s Standard Terms & Conditions are designed to simplify the contract negotiation process for advertisers and publishers, by providing a common understanding of the key terms and conditions of the advertising relationship. This helps to reduce confusion and streamline the process, making it easier for both parties to reach agreement and get to market faster.
To ensure that these standards continue to reflect the latest industry trends and best practices, the IAB in collaboration with the 4A’s and ANA have established a task force dedicated to updating and improving the Standard Terms & Conditions.
The Terms & Conditions Task Force is designed to facilitate fairness and transparency in the digital advertising industry. Since 2009, advancements in ad technology and the emergence of new media channels have prompted publishers and ad tech providers to offer new products and services to media buyers, necessitating updates to standard terms and conditions. This includes social media ads, programmatic inventory, advanced TV, in-game advertisements, streaming audio & podcasts, ad verification, ad viewability, and more.
The Terms & Conditions Task Force is dedicated to identifying and streamlining typically re-negotiated, rewritten, or amended terms -- such as payment terms, editorial adjacency, custom materials, cancellation terms, sponsorships, and more. Additionally, the Task Force aims to ensure that Standard Terms & Conditions provide clear guidance on remedies and requirements -- such as measurement discrepancies, damaged creative, under-delivery, data collection, repurposing data, and more.
Overall, the Terms & Conditions Task Force aims to enhance and simplify standard terms and conditions in the digital advertising industry, fostering fairness and transparency for all stakeholders.
MediaPost: What are the next new things causing the industry to rethink T&Cs?
Eng: The IAB/4A’s Terms & Conditions (v. 3.0) (“Version 3.0”) does not adequately address the current programmatic and other business-use cases in the digital advertising industry. As a result, parties use lengthy addendums and other contractual vehicles that often make contract negotiations cumbersome.
We do not believe that, given the anticipated deprecation of the third-party cookie and changes to identifiers for advertising (IFA), as well as the concomitant changes in addressability, now is the best time to revise those terms. We believe it is important to begin the process of collecting, analyzing and updating contractual terms and conditions that cause friction in negotiations. Data ownership and use limitations are key areas of inquiry in this regard.
MediaPost: Are the buy and sell sides rowing in the same direction, or are there any tensions about specific areas of revision?
Eng: The entire document needs an overhaul, and we’ve heard from many different constituents that there is a need to update. In particular, the areas that are most cited include: brand safety, ad fraud, programmatic ads, social ads, CTV/Advanced television, sponsorships and custom materials, finance & reconciliation (including payment terms, cancellation, etc.), upfront buys, ad tracking, data collection and usage, etc.
MediaPost: Will the new T&Cs have a standard for advertising/media payment liability -- sole, sequential, joint and several, etc.? Or does each side still write their own clause inserting their own liability terms?Eng: Nothing is off the table for consideration, discussion and debate.
The question of whether we use a panel, which means a small sample, or big data, which means a huge sample keeps confusing the issue. Where it's possible to control and maintain a panel properly due to its limited size, this does not necessarily apply to a big data panel. Moreover if a panel measures all of the homes' receivers while a big data panel tracks only ACR sets, that's a second issue----is the resulting data indicative of all activity? As for set top box data how do we deal with the fact that so many households to not subscribe to "pay TV" and, hence, are not part of the STB panel? Do we really believe that sample balancing solves this problem? Do we accept the idea that whom ever we got in our STB panel was representative of all homes with similar demos in terms of their set usage behavior?
As for rating fragmentation, sure it's a factor. Many shows on many channels have miniscule audiences. But do we really need to create a system where each minute of every show has a large sample base for projecting its "audience"? If a show reaches 20,000 people must we design our system so we can get "reliable" data---by demos, yet---for this tiny bit of audience? Aren't most time buys based on audience tonnage guarantees across entire ad schedules---not every "impression", individually?
Being a realist, I accept the fact that what we will get will be something along the lines that Nielsen is offering---a small panel for "viewer-per-set" data melded into a collection of "big data" ACR and/or STP panels which measure only some of the TV set activity in certain kinds of homes. I also expect the sellers to veto any attempt to include attentiveness as a standard part of the system. Which means that what will develop will be driven largely by digital media thinking---"impressions"equals "audience" and you can "attribute" the effects of every "impression" re sales or other results. In other words it will be a great leap sideways. Just my opinion, of course.
Ed, you point out the challenges big data assets face, and which today's audience measurement professionals must grapple with. Without getting too far into the weeds, I would say that while both STB and Smart TV data have limitations on their own, as CIMM demonstrated (in a paper by Shimmel and Broussard), the attributes of one of these data types tends to mitigate the challenges of the other. In other words, an intelligent combining of Smart TV ACR and Set Top Box data can provide the tools to mitigate most of the shortcomings that you note that either data set is heir to.
Also, according to that same CIMM paper, I think something like 90% of US TV HHs have either a Smart TV, a STB, or both. In the world of representation and missiing data. I'm comfortable with that coverage as compared to the portion of the population that would ever end up in a TV people meter panel (having worked on meter panels at Arbitron as a young media researcher. and having overseen the panel team at Comscore, I can tell you that meter panel response rates are scanndalously low, regardless of what provider promo mterials might boast.) An American consumer is WAY more likely to be represented in Smart TV and/or Set Top Box footprints than in a TV meter panel.
That said, there is a segment that remains elusive: the portion of Over the Air HHs (OTA) that lack broadband. While there are OTA households in Smart TV footprints, they must have Internet access, otherwise the TV isn't all that smart. It is essetial to calibrate and correct for that missing sliver in order to get broadcast (as opposed to cable or streaming) right. And that's definitely a place where a panel could be helpful. (Claudio is, I'm guessing, right there with me.)
Josh, as you know, I don't expect to win this one. Indeed I take it as a lock that we will wind up with a national TV rating service where most of the data is supplied by device usage informatiuon from a combination of ACR and STB homes.
Regarding the problems that entails, even if 90% of all TV homes---not all homes, btw----have either an ACR set or are "pay TV" subscribers, these willl be two separate panels and neither represents anything close to 90%of all TV homes or set usage. As for ACR homes, it is estimated that about 40% of all operational sets are still the old type---hence this activity is not measured by ACR set panels. I understand that one can devise all sorts of weighting and reweighting systems to create the statistical illusion that the end result is representative of the TV population as a whole---but I tend to doubt that this is actually the case. Nevertheless I think that the pressure is too great---especially from the digital side--to try to measure every single "impression" with some degree of precision---or theoretical "accuracy"-----so I must live with it.
My main problem is about the definition of "audience". At this point we seem certain to be going with the ad message being played on the screen---with viewing assumed to be almost 100%---aka an "impression". That's where the really great errors will be found as no matter how the metric is explained, no matter what small print is offered, the advertisers, agencies and attribution/ROI modellers are going to accept the findings as actual ad viewing. Which introduces an error of anywhere between 50-150% into the data. With such bad information being employed,while you may still get an idea of what your money is buying, that's all it will be---an inkling----not a fairly hard fact. And the errors won't be constant across all situations or venues, so you can attempt to account for them via more statistical weightings.