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Re: Frequency Capping

From: Chris Mejia <chris.mejia@iab.net>
Date: Wed, 11 Jul 2012 19:27:27 +0000
To: "Grimmelmann, James" <James.Grimmelmann@nyls.edu>, W3C DNT Working Group Mailing List <public-tracking@w3.org>
CC: Mike Zaneis <mike@iab.net>, Brendan Riordan-Butterworth <Brendan@iab.net>
Message-ID: <CC233292.1FB2A%chris.mejia@iab.net>

Since I didn't go into the obvious details before, I will dive a little
deeper here, as I realize now that many on this forum are not intimately
experienced with the actual business of digital advertising.  I hope you
will appreciate that the digital advertising industry carefully balances
business concerns with user concerns (thus the "win-win" model we have
proven works--consumers and thus consumer protection are key to our

With regards to f-capping on the side of user concerns, as I previously
stated, advertisers AND publishers do not want to annoy users with
repeated delivery of the same ad creative.  Nor is the repeated delivery
of the same ad creative to the same user a good business practice for
advertisers and publishers.  There is always a monetary cost associated
with the delivery of an ad impression (such as the cost of ad serving and
the overhead of campaign management).  So the assertion that we just spray
the same ads indiscriminately onto those who have turned on DNT:1 will not
only be found utterly annoying to those users (at the additional cost of
negative consumer brand association for those advertisers), it also costs
real money.  Remember, every single impression served costs actual
money--and aggregated, the cost of serving billions of impressions daily
is not trivial (take away here = nothing that happens on the Internet is
actually "free" of costs).  When a publisher's cost goes up, those costs
are passed to the advertiser (and ultimately to the consumer). So when the
publisher serves more ads (in this case, as a result of NOT f-capping a
campaign), the publisher charges the advertiser for those additional
served impressions.  The idea that this increased cost be paid for by
publishers and advertisers, on behalf of those users who are opting out of
the publisher:consumer value exchange (when these consumers effectively
'devalue' themselves in the value exchange by turning on DNT:1), goes
against the laws of market economics.  If you think advertisers are not
going to require f-capping, think again.  Advertisers have plenty of
reasonable business reasons to require f-capping in their contracts:  i.e.
a) not annoy consumers with overdelivery when such annoyance leads to
negative advertiser brand association, and b) not needlessly waste ad
impressions and money on serving ads over and over again to users who have
opted out of the value exchange in the first place.  Again, f-capping
represents a win-win practice for industry AND users, even those users who
have opted out with DNT:1.

Since we are on the topic of publishing costs and the value exchange that
pays for these costs so that content may be delivered to users, I'm very
concerned about the end game of an irresponsible DNT specification (just
as a reminder, I am FOR a responsible, balanced and well thought out DNT
spec).  In the world of ubiquitous DNT:1 signals that many advocates on
this forum support, what do you suppose will be the necessary
business-motivated recourse for most for-profit publishers?  My educated
guess is the rapid proliferation of payment gateways, with subscription
services paying for content when advertising alone no longer supports the
publishing of "free" content.

In this case, is the W3C inadvertently, but consequently promoting the
idea of a new digital divide?  A divide where those with wealth and credit
cards afford access to professionally developed content, while those
without sufficient wealth will be blocked from accessing the same?  If you
don't think this is a realistic outcome, please explain precisely how
professionally developed content will be paid for without sufficient
advertising revenue.  Remember, real costs must be paid for with real

Is the answer that the reduction in revenue that a ubiquitous DNT:1 will
undoubtedly bring, mean that publishers should scale back innovation, cut
jobs, slow investment in the future?  Should all consumers pay this price?
 In a free market economy, I'm going to bet that innovation will actually
not slow; BUT it will be shifted to focus on only those who can afford to
pay for it.  Will government pay for the the (less financially fortunate)
others?  Will non-profit consumer advocates pay for 'the others' to access
this premium content?  Today, the vast majority of that online innovation
and premium content is paid for by the publisher:consumer value exchange
(advertising pays for innovation, content and access to that content).

And how about the free press?  Who will pay for the free press?  Over the
last 10-years we have experienced a severe reduction in subsidized
regional newspaper content as a result of underperforming advertising
revenues (economy/recession related?) for local news organizations.
Consequently, to reduce costs, most regional newspapers who have survived
(or are just barely hanging on in some cases) are restructuring their
service to less costly Web-only publishing models.  But even Web
publishing costs money, and ad revenues per impression are far less online
than they were in print.  So when these newspapers (the free, advertising
supported, press) cannot afford to self-sustain online, who will pay to
replace their professional news reporting?  Are we all comfortable moving
to a government funded press model?  If this sounds ridiculous, have a
look at the trend: 
http://online.wsj.com/public/resources/documents/NEWSPAPERS0903.html.  In
conclusion, I'll step off my soapbox as soon as those who questions such
reasonable win-win practices as f-capping step off theirs, and we all
start working together on reasonable win-win solutions.

Chris Mejia | Digital Supply Chain Solutions | Ad Technology Group |
Interactive Advertising Bureau - IAB

On 7/11/12 1:31 PM, "Grimmelmann, James" <James.Grimmelmann@nyls.edu>

>Advertisers require frequency capping in insertion orders because ad
>deliverers are capable of providing it.  If an ad deliverer were to say
>that it could not promise pure frequency capping for users who have
>requested DNT, but only some best-efforts version such as the one
>Jonathan outlines, the deliverer simply wouldn't let advertisers write
>that term into their contracts with it.  Of course, this might come at
>some cost to the deliverer, and that tradeoff is a fair subject for
>discussion.  But let's not mistake the "requirements" of current
>advertising contracts for the requirements of the future advertising
>contracts that will be written in view of the DNT standard and various
>parties' implementations of it.
>I would add that since the primary motivation of frequency capping is to
>reduce user annoyance, users ought to be given the chance to choose for
>themselves whether to suffer that annoyance or the annoyance of being
>tracked for frequency capping purposes.
>James Grimmelmann              Professor of Law
>New York Law School                 (212) 431-2864
>185 West Broadway 
>New York, NY 10013    http://james.grimmelmann.net
>On Jul 11, 2012, at 12:59 PM, Chris Mejia wrote:
>Frequency capping (f-capping) is usually a contractual obligation for the
>party responsible for delivering the ad (an ad-netork, a publisher, and
>exchange, etc.) and is almost always required by the advertiser in
>insertion orders (the insertion order or "IO" is the contract between the
>parties).  It looks like your assumption below is that f-capping is
>(only) a 'tactic' to increase ROI for performance campaigns.  While this
>is sometimes true (yet mostly not), it's actually rarely the real
>motivation of doing f-capping.  The requirement for f-capping the
>delivery of a campaign to users is generally contractually obligated by
>the advertiser, for several good reasons, but most importantly for not
>annoying the user with multiple servings of the same ad creative, over
>and over again in one time frame (i.e. in a 24-hour time period).
>As f-capping is generally contractually obligated, it's not up to the
>deliverer of the ad to CHOOSE which campaigns to f-cap‹ it's a
>REQUIREMENT to f-cap all campaigns where contractually obligated to do
>so.  F-capping has happened in television advertising for many years‹
>imagine how annoying it is when the same tv ad spot plays over and over
>again (in fact this happens, and I'm sure we all find it annoying).
>To sum up, while f-capping can sometimes increase ROI for advertisers
>(it's not necessarily always true), it is most often contractually
>obligated (per the Insertion Order).  The primary motivation for
>f-capping is to not annoy the user with repeated serving of the same ad
>creative during a time period.  In my experience, the vast majority of
>f-capping is  set at 1:24 or 2:24, etc. (restricting the showing of a
>particular ad creative, 1 time in 24-hours, or 2-times in 24-hours).
>I hope this helps clarify the motivation for f-capping and leads to
>mutual appreciation for the need.
>Kind Regards,
>Chris Mejia | Digital Supply Chain Solutions | Ad Technology Group |
>Interactive Advertising Bureau - IAB
>From: Jonathan Mayer <jmayer@stanford.edu<mailto:jmayer@stanford.edu>>
>Date: Tue, 10 Jul 2012 14:26:12 -0700
>To: David Wainberg - NAI
>Cc: W3C DNT Working Group Mailing List
>Subject: Re: Frequency Capping
>Resent-From: W3C DNT Working Group Mailing List
>Resent-Date: Tue, 10 Jul 2012 21:26:46 +0000
>I'd sure like to hear more from advertising industry participants about
>how frequency capping integrates into advertisement selection.  The
>AppNexus approach, if I read correctly, goes roughly as follows:
>1) Begin with the set of all campaigns.
>2) Filter by targeting criteria.
>3) Filter by frequency capping.
>4) Assign an expected revenue to each campaign.
>5) Select the campaign with greatest expected revenue.
>The approach includes testing the frequency cap of every campaign that
>matches targeting criteria.  What about, instead, only testing the cap
>for a subset of those campaigns:
>1) Begin with the set of all campaigns.
>2) Filter by targeting criteria.
>3) Assign an expected revenue to each campaign.
>4) Select the n campaigns with greatest expected revenue.
>5) Filter by frequency capping.
>6) Select the campaign with greatest expected revenue.
>Some relevant empirical questions include: How often are the highest
>revenue campaigns frequency capped?  How well can an ad company predict
>which high-revenue campaigns will and won't be frequency capped?
>On Monday, July 9, 2012 at 11:34 AM, David Wainberg wrote:
>Hi All,
>In case you haven't seen it already, I recommend Prof. Felten's excellent
>blog on "Privacy by Design: Frequency Capping." Please also read Brian
>O'Kelley's post in the comment section explaining what he sees as the
>technical hurdles for these alternative frequency capping methods. (I may
>be wrong, but I think Brian is a former student of Prof. Felten.) This
>kind of detailed technical discussion of these proposals seems very
>helpful. First, it helps us set reasonable expectations on all sides.
>Second, and more interesting to me, is that maybe we can have more
>discussion and collaboration on bringing these sorts of things to
Received on Wednesday, 11 July 2012 19:28:15 UTC

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