Re: ACTION-216 - Financial Reporting "Exceptions"

Brooks -- thank you for this useful and detailed explanation.

So I understand what precisely we're concerned about here, can you, or 
someone else, opine on whether CPC click or CPA action would qualify as 
'substantial interaction'?

On 7/23/2012 6:29 PM, Dobbs, Brooks wrote:
>
> I was apparently assigned the unenviable task of summarizing the need 
> for financial reporting exceptions.Please find below a condensed 
> examination of the issue and a broad exception that data used 
> exclusively for financial reporting ought to be out of scope for DNT.
>
>
> I am cognizant that this is a very broad exception, but I think the 
> basis for discussion is laid out below.   In looking at this I am 
> specifically aware of the danger of creating exceptions which may 
> favor one sales basis over another or indeed one entity over another.
>
> ---------------------
>
> Internet based advertising is typically sold based on one of, or a 
> combination of, three bases: 1) CPM – where the billable event is an 
> individual ad serve (though prices are generally quoted in terms of 
> thousands), 2) CPC – where the billable event is an individual click 
> or interaction with the ad unit or 3) CPA – where the billable event 
> is an action or post click activity subsequent and attributable to 
> some interaction with the ad unit.The dollar value of each billable 
> event generally rises through the above progression and while prices 
> for each vary with other factors, including ad targeting, the specific 
> revenues measured per event are often in the order of the 
> following:CPM events in the fraction of cents per event, CPC events in 
> the whole dollar per event and CPA events in the 10s of dollars or 
> potentially higher per event.
>
> It goes without saying that it is only the ability for the purchaser 
> to maintain confidence in the quality of the billable event that 
> allows for the value exchange to work, and, as per event prices rise, 
> so does the need for unique events to be associated with supporting 
> data which allows for increased repudiation.This said, even were the 
> value of unique billable events is relatively low (CPM), the sum of 
> their values may not be low requiring commensurate examination of the 
> underlying quality of each billable event.
>
> A closer look at each form of advertising and the need for quality 
> assurance is below:
>
> - CPM billing contracts may vary, but for the fundamental confidence 
> in the system to be maintained the purchasing advertiser needs to 
> ensure the quality of their ad buy by examining all event level data 
> pointswhich could reasonably allow them to conclude charges where not 
> made to, e.g.: non-human activity or to delivery at times, in places 
> or in contexts outside of agreed upon terms.
>
> - CPC billing is based on the purchaser’s confidence that the quality 
> of the click is sufficient to warrant the relatively high per event 
> expenditure.To validate this the advertiser needs data showing the 
> event was, for instance: not resultant of a non-human activity and not 
> initiated by a party with ulterior financial motivation.
>
> - CPA billing is often based on the advertiser sharing part of its 
> realized revenue with the supplier of such advertising 
> opportunity.Unlike CPM and CPC, CPA requires data collection at 
> minimum at two times and two addresses.At the relatively high per 
> event cost of CPA advertising, the advertiser must feel confident not 
> only that the sale was linkable to a previous ad view through the 
> collection of both post ad serve and ad serve event level data, but 
> further the ability to maintain that offlinecollection of revenues (or 
> lack thereof) can be referenced back to the billing/payment system.
>
> Each of these systems currently utilizes a wide range of event level 
> data to ensure billable quality.In the US alone, 2011 confidence in 
> these models allowed over 31 billion dollars in advertising and 
> subsequent ad supported services to be provided.Of note here is that 
> confidence in quality of billable events is distinct from issues of 
> fraud, as most events in need of billing correction do not rise to the 
> level of legal fraud, e.g. a technologist spidering a site and 
> “calling” all resultant CPM ads is not “fraud” on the part of either 
> the technologist or the unknowing website, but is still an event which 
> may be contractually prohibited from billing.For this reason, 
> exceptions tied to “fraud prevention” are too narrow to maintain 
> confidence in the ecosystem.
>
> Owing to the diversity in techniques used to determinequality, any 
> restriction on the collection and/or use of /data which is reasonably 
> stored or processed solely for ensuring the quality of terms of a 
> contract or other agreement as between buyer and seller/ should not be 
> considered “tracking” and should be out of scope of requirements of a 
> Do Not Track guideline.  Data collected and used under a financial 
> reporting exception, which would otherwise be impacted by this 
> specification, may not be used for any other purpose not covered by 
> this or another exception.
>
>
>
> -- 
>
> *Brooks Dobbs, CIPP *| Chief Privacy Officer |*KBM Group* | Part of 
> the Wunderman Network
> (Tel) 678 580 2683 | (Mob) 678 492 1662 | *kbmg.com*
> _brooks.dobbs@kbmg.com
>
>
> _
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