In the financial markets, there are multiple layers of regulation. Banks have their own compliance departments; the NYSE has its own regulations; and the SEC provides yet another set of rules to protect consumers and financial institutions from fraud and other unsportsmanlike conduct.

Online advertising has yet to evolve a similar set of standards that protect consumers, advertisers, publishers, and networks from each other. Some steps toward this have happened. The government has implemented very specific laws to protect against egregious violations of consumer trust (spam, spyware, etc). More directly applicable to the industry, the IAB, NAI, and other standards bodies have begun the process of standardizing measurement, nomenclature, terms and conditions, and other key principles of industry-wide commerce.

However, these external regulatory bodies aren’t sufficient either in finance or in online media. Often, their rulings lag the market by years, and their arbitration process is too slow to react to the day-to-day issues that companies encounter. So what else is being done? Currently, most ad networks have their own standards and policies. However, these standards are self-imposed, and more importantly, are often subjective. For instance, the Right Media network has a policy that if we make a trafficking error, we don’t spread the cost of the error on to our publishers. Now, that’s a great policy – but how can publishers be sure that we implement it? Obviously, this is a subtle issue, but it’s something that can dramatically affect revenue.

Here’s where our open media exchange comes into play. The exchange (we’re currently considering the name “Right Media Exchange” as a replacement for “Yield Manager Marketplace”) plays the same role as the NYSE does for the financial markets. Not only does it provide the underlying transactional infrastructure for media, it will provide a common, trusted, enforceable set of rules and regulations that all exchange participants adhere to. This doesn’t mean that every member of the exchange has to adopt every policy. However, and this is important, it means that if an exchange member says that they adhere to a certain policy, the exchange will regulate and make sure that they actually do.

Who is this good for? It’s great for advertisers and agencies, because they can be certain that if they ask their exchange-member networks and publishers to run only on particular types of sites, they’ll know for a fact that this is the case. It’s great for publishers, because they know that if they ask for advertiser exclusions or protection against errors and adjustments, they’ll know for a fact that that’s what they’ll get. And it’s great for networks, because they have a partner looking out for them to help them implement their policies.

Another really cool thing about the exchange providing oversight is that we’ll be able to provide audited reach and traffic numbers for all exchange members, with far better accuracy than outside measurement companies like Comscore. I’m not sure why Doubleclick and Atlas don’t provide this functionality for their customers, but it’s something we’ll certainly do (on an opt-in basis).

One crucial part of regulating the exchange is to get our members involved in the process of defining standards, policies, and auditing processes. We’ve started this process already, with our Media Guard program, and we’ll be expanding it as our regulatory efforts continue.

So the bottom line: exchange oversight is necessary to build industry trust, and that trust will translate directly into dollars for the exchange and its members. This is an exciting step for all of us, and we look forward to rolling out our regulatory bodies in the upcoming months.

This entry was posted on Tuesday, April 18th, 2006 at 12:00 am and is filed under About Right Media, Right Media Exchange, Media Guard. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.