Rothenberg Says Ad Blocking Is a War against Diversity and Freedom of Expression 01.25.16 Below is the full text from Randall Rothenberg’s opening keynote at the 2016 IAB Annual Leadership Meeting On April 19, 1996, less than two years after AT&T commissioned and ran the Internet’s first banner advertisement, on the online magazine Hotwired, representatives from 35 companies met in New York and agreed to form the Internet Advertising Council. As befit the new medium and the people in it, then and now, their goals were both deeply modest and wildly immodest at the same time. Rich Lefurgy, the Vice President for Advertising and Marketing at a company called Starwave, told the press, “Advertising on the Internet has already come of age and is now poised to take its place alongside traditional media” – an assertion that was most certainly not true. But then he added something that proved eminently truthful. “The IAC,” he said, “will bring organization and structure to an industry that until now had no collective voice or representative body.” A 9-member steering committee was formed. Some of the publishing brands on it are now defunct, including Starwave, Infoseek, Juno, Prodigy, and Softbank Interactive Marketing. But some are quite “funct,” including CNET, Microsoft, Time Inc., and Turner Broadcasting. Together, they determined the priorities for the new trade association. “To promote the use and effectiveness of the Internet as an advertising vehicle, educate the marketplace, establish industry guidelines, and become the unified voice for companies involved in Internet advertising sales.” Fast forward 20 years, and it’s remarkable how much has changed. The 35 founding companies have grown to more than 600 General and Associate Members, with another 1,160 in our Long Tail Alliance. The 9-member steering committee is now a 39-member Board, representing some of the largest media and technology companies on earth. The Interactive Advertising Bureau, as we rebranded ourselves in 2001, has grown from a handful of part-time staffers to nearly 70 full-timers, in New York, Washington, D.C., San Francisco, and Denver. From the seed planted by our single IAB in 1996, 44 other IAB’s now dot every continent on earth except Antarctica. We are an acknowledged powerhouse in Washington, D.C. We have created the Digital Advertising Alliance and its AdChoices program, one of the most robust consumer privacy self-regulatory mechanisms in industry. We have successfully changed the advertising “currency” to the viewable impression. We shepherd the Digital Content Newfronts and the dawning revolution in digital video news and entertainment. We oversee an industry-leading diversity initiative, and have helped 8,000 men and women in interactive media companies become IAB-certified Digital Ad Sales, Ad Ops, and Data executives, with another 4,000 in the pipeline. The IAB Technology Laboratory is now the global representative body for establishing industry technical standards worldwide. We are founders of TAG, the industry-leading organization to weed fraud from the digital advertising supply chain. Perhaps of greatest interest – to those numerically inclined – is the growth of the industry we represent. In December 1996, IAB issued its first digital revenue report, showing industry revenues of $157 million for the first three-quarters of our founding year. Today, annual U.S. digital advertising revenues now top $50 billion. And this year or next, digital ad spend in the United States will likely surpass total television, making IP-based advertising the largest segment in the ad industry. So many were supposed to be here today, but ended up stuck on the East Coast because of the storm. Whether here or not, I would indeed like to call out: Richy Glassberg – then with Turner, now with Medialets Steven Goldberg – then with Microsoft, now with LiveRail Rich LeFurgy – then with Starwave, now with Archer Advisors Scott Schiller – then with Sony, now with NBCUniversal Doug Weaver – then with Firefly, now with Upstream Group In addition, even though he could not be here, I want to recognize Greg Stuart, who led IAB through its toughest years after the first dot-com bust in the early 2000’s, and now leads the Mobile Marketing Association. And finally, I’d like to ask all the men and women who have served on the Board of the IAB during our first 20 years to stand, and accept the acknowledgement of your grateful peers. Thank you for building our industry. Thank you for the first $50 billion. Of course, we are not here, you are not here, to celebrate the past. You are here to create the future – to find your way to The Next $50 billion. And we have some of the digital world’s most provocative thinkers and doers on this stage through tomorrow afternoon to help you reconnoiter this path. Oracle founder Larry Ellison is here today with some remarkable insights into how the combination of data, analytics, and cloud computing will revolutionize marketing and media. We will hear from Wikipedia and Wikia founder Jimmy Wales on harnessing the power of fan-based communities. Google’s top advertising executive, Sridhar Ramaswamy, will explain how the industry’s next growth wave will come from perfecting the mobile experience. Tom Shields and Michael Rubenstein of Appnexus will describe why technology remains the central driver of growth in digital advertising and media. And coming up next, Taco Bell Chief Marketing Officer Marisa Thalberg will show how the next $50 billion will derive from great brand storytelling. Certainly, this is the most stimulating IAB ALM agenda ever. I thank all our speakers for sharing their thought leadership with us. And I think all 1,200 of you for being here and being part of this remarkable industry. But since you are here, I want to take the opportunity to ask you a personal question – a question that may make you uncomfortable. Sure, $50 billion in revenue is a great thing – for the businesses taking it in. But how will we create – and how will you, personally, contribute to creating – the next $50 billion in value…value to society, value to the culture, value to your family, value to your friends and neighbors? Don’t get me wrong. There’s nothing bad about revenue. Revenue – and the promise of more revenue – creates jobs. It attracts investment, which creates more jobs. Jobs provide families with income, which pays for education, and greater opportunity, and innovation, and yet more opportunity, and creative expression. So yes, money is meaningful, in multiple ways. But if money is your only goal, then you risk falling into relativism – a pernicious trap, for you begin weighing all potential returns based on the single metric of how much more money you can make. Truth, beauty, fairness, justice, honesty, civic pride, neighborliness – they become means to an end, rather than ends in themselves. That is debilitating, and ultimately deadens the soul. I want you to confront that challenge. I want you to remember that there are greater and longer-term values than the mere promise of financial wealth that attracts so many to the digital advertising industry. One of the most transcendent values to which you can devote yourself is diversity. We are living in a period of racial, ethnic, and religious vilification unlike anything I have experienced in my adult life. Presidential candidates from a major party actually are calling for people to be segregated and penalized on the basis of their religion. Whole ethnic groups, particularly Latinos and everyone practicing Islam, are being demonized. Rules and laws are being proposed that would prevent these people from entering the United States, or staying here, based solely on their backgrounds, divorced entirely from their productivity or family ties here. When you get back to your office, look around you at work, and pay attention. For these are your friends and colleagues who are under attack. Their skin is black, and brown, and ochre, as well as white. They speak Mandarin, and Spanish, and Hindu, and Farsi, as well as English. They celebrate Diwali, and Kwanzaa, and Ramadan, as well as Christmas and Chanukkah. And they are under assault. And when they are under attack, you are under attack. For they are the future of the American economy. They are the future of consumption. They are the future of advertising and media. They are your childrens’ classmates, your in-laws, the parents of your future grandchildren. How can you honor them? You can actively promote diversity in hiring in your company. The IAB Education Foundation has launched iDiverse. iDiverse is a program that will train 10,000 entry-level candidates, increase the diversity of the ecosystem’s candidate pool by 50 percent and increase total employee diversity and retention statistics by 25 percent by 2020. Diversity actually is an ideological underpinning of the Internet itself. I said this in my first presentation to you, in my opening remarks at the very first IAB Annual Leadership Meeting in 2008. We had 400 of you then, in a room set for 250. At that time, I opened by saying: “This revolution – like all great revolutions – has a purpose. We are here to enable people around the globe to communicate with each other, to share ideas, and to improve their lives – intellectually, economically, emotionally, and esthetically.” “Interactive media companies are the center of an ecosystem that does exactly that. By tearing down barriers-to-entry in both content creation and distribution, interactive technologies make it possible for an individual to publish a national “magazine,” make a documentary film, record an original symphony, even program a television network, and seek audiences around the nation and the globe, with the applications that come built into a laptop computer. Never has speech been more open, available and varied.” Freedom of speech, diversity of thought, access to the means of universal communication, the opportunity to speak truth to power – these are the way societies grow. They are the underpinnings of economic competition, for reaching people with and attracting them to new commercial ideas is the stimulus to all innovation. In turn, that competition – competition among economic actors, and competition in the marketplace of ideas – assures that neither a single dominant economic power nor the state itself can control all the levers of society. In all advanced societies around the world, advertising has been a central contributor to assuring such freedom and diversity of expression and economic action. This fact has been well documented in every major history of media in the United States. As Princeton Professor Paul Starr wrote in his Pulitzer Prize-winning history, “The Creation of the Media,” “American journalism became more of an independent and innovative source of information just as it became more of a means of advertising and publicity.” It is for this very reason – the virtuous circle that links freedom to advertise to freedom of the press to freedom of expression to economic freedom – that Article 19, the influential NGO, says: “The right to freedom of expression covers any kind of information or ideas, not only contributions to political, cultural or artistic debate but also mundane and commercially motivated expressions.” And this is why I hate the ad-block profiteers. Now, you may be aware of a kerfuffle that began about 10 days ago, when an unethical, immoral, mendacious coven of techie wannabes at a for-profit German company called AdBlock-Plus took to the digisphere to complain over and over that IAB had “disinvited” them to this convention. That, of course, is as much a lie as the others they routinely try to tell the world. We had never invited them in the first place. They registered for this event online. When we found out, we cancelled the registration and reversed their credit card billing. Why? For the simple reason that they are stealing from publishers, subverting freedom of the press, operating a business model predicated on censorship of content, and ultimately forcing consumers to pay more money for less – and less diverse – information. AdBlock-Plus claims it wants to engage in dialogue. But its form of dialogue is an incessant monologue. Don’t take my word for it. During Advertising Week in New York last fall, the company convened a dinner it fatuously billed as “Camp David,” “a round table discussion…to hear from publishers and others about what we can do to improve advertising and the Internet for all.” Scores of publishing executives were invited. Two showed up. They could get none of their questions answered about how the company intends to administer its so-called “Acceptable Ads” program, who would serve on that program’s allegedly independent board, what powers that board would have, or how its payment plans would work. Each used the same word to describe the AdBlock-Plus executives: “disingenuous.” Perhaps most notably, neither of these publishers has received a single follow-up call in the four months since “Camp David” took place. So much for dialogue. Of course, none of this surprises me. This is what happens when your only motivation, your only metric, is money. For that is what AdBlock-Plus is: an old-fashioned extortion racket, gussied up in the flowery but false language of contemporary consumerism. I’m far from the first person to notice this. Writing up an interview with AdBlock-Plus’s leaders more than two years ago in Salon, Andrew Leonard said: “It still sounds to me like something that bears more than a passing resemblance to a protection racket. Pay up, or we’ll break your windows! Pay up, or millions of Adblock Plus users will never see any of your ads.” Taiwanese reporter and blogger Sascha Pallenberg said similarly, calling AdBlock-Plus “a mafia-like advertising network.” The bad news is, AdBlock-Plus is not alone. For-profit ad-blockers have been one of the more recent darlings of the venture capital industry and angel investors – including firms with investments in advertising technology and ad-supported publishing companies. Shine, an Israeli startup trying to sell ad-blocking software to mobile phone networks, is backed prominently by Horizons Ventures, the VC arm of Hong Kong billionaire Li Ka-Shing, and run by his girlfriend. His other investments include Spotify and Facebook. The latest ad-blocking company is a Web browser startup called “Brave.” It was launched by former Mozilla CEO Brendan Eich, whose last major investment was in banning gay marriage in California. His business model not only strips advertisements from publishers’ pages – it replaces them with his own for-profit ads. THIS is the true face of ad blocking. It is the rich and self-righteous, who want to tell everyone else what they can and cannot read and watch and hear – self-proclaimed libertarians whose liberty involves denying freedom to everyone else. The ad-block profiteers are building for-profit companies whose business models are premised on impeding the movement of commercial, political, and public-service communication between and among producers and consumers. They offer to lift their toll gates for those wealthy enough to pay them off, or who submit to their demands that they constrict their freedom of speech to fit the shackles of their revenue schemes. They may attempt to dignify their practices with such politically correct phrases as “reasonable advertising,” “responsible advertising,” and “acceptable ads”; and they can claim as loudly as they want that they seek “constructive rapport” with other stakeholders. But in fact, they are engaged in the techniques of The Big Lie, declaring themselves the friends of those whose livelihoods they would destroy, and allies to those whose freedoms they would subvert. There certainly are intelligent, well-meaning critics of advertising, marketing, and media with whom we engage, whose aim is to advance consumers’ interests through dialogue and development. The ad-block profiteers are not among them. They cloak themselves in a Halloween mask of consumerism as they attempt to impose private taxes on consumers and businesses alike. Their technologies indiscriminately obstruct competitive pricing data, information about product features, vital political opinions, site content, user options, public interest communications, and other intelligence necessary for the functioning of democratic capitalist societies. Surveys repeatedly show that upwards of 75% of consumers prefer ad-supported Internet sites where the content is free over ad-free sites where they would pay fees for content. Fewer than 10% of consumers want to pay for content. By driving digital publishers, including some of the most prestigious news organizations in the world, to impose fees on consumers in order to continue to support their business and content-development objectives, the ad-block profiteers are subverting the will of consumers. So where is the good news in all of this? Well, in their race to the bottom and frenzy for investment, the ad-block profiteers seem more intent on killing each other than on killing advertising – which, of course, they require in order to feed their business models. Many of their business models are undoubtedly illegal. Already, Shine’s model of ISP-level ad-blocking has been cited by regulators as a probable violation of net neutrality principles. More and more publishers are initiating what IAB calls “detection-notice-choice-and constraint” regimes. They are installing scripts that enable them to see when consumers coming to their sites have ad-blockers installed; they are providing notice to consumers about that and about publishers’ business models, which largely require advertising to support otherwise free content. They are offering consumers choices – to turn off their ad-blockers, to pay a subscription fee, or another alternative. And absent one of those choices, the publishers are constraining consumers’ access to content, reinforcing the immense value of what they deliver. And it’s working – IAB publishers implementing DNCC are seeing high percentages of consumers making mutually beneficial choices to maintain their access to desired content. But the best news of all is that the ad-block profiteers have done this industry a favor. They have forced us to look inward – at our own relentless self-involvement – and outward, to the men, women, and children who are our actual customers. IAB Senior Vice President and Tech Lab General Manager Scott Cunningham put it best and most succinctly in an October IABlog post: “We messed up. As technologists, tasked with delivering content and services to users, we lost track of the user experience.” IAB research conducted in 2014 found that one-third of U.S. Web users – and 41 percent of millennials – had installed ad-blocking software on one device or another. The no. 1 reason consumers used ad blockers was the fear that advertising could infect their computers or smartphones with viruses. But more than two-thirds of ad-blocking consumers also said they believed advertising slowed their access to the Internet. “The worst ads load so slowly that they use up data plans and sap battery life,” The New York Times reported recently. Why did we lose track of user experience? For much of the past decade, the digital ad industry, aided and abetted by venture capitalists with no long-term stake in the viability of media and marketing businesses, have been in a headlong rush to subvert industry standards, hoping they can own the single business model that can lock in proprietary advantage and lock out competitors in the $600 billion global ad industry. The result has been breathtaking innovation – but also suffocating chaos. Multitudes of could-be formats and wannabe standards crowd screens, interrupt consumers’ activities while impeding the delivery of desired content, create supply chain vulnerabilities, generate privacy concerns, and drive fears about data security. Ad-blocking has been a consumer plebiscite; as former Mozilla executive Darren Herman noted at the IAB Ad Operations Summit a few months back, the software offered consumers a vote – and they have voted no on chaos, opacity, and slowness. Fortunately, there is a real way out of this conundrum. It requires this industry to embrace the founding rationale for the IAB, articulated 20 years ago by our forefathers and foremothers. We must create new operating standards – consumer-friendly rules of the road that regulate how we will operate our sites, our advertising, and our delivery. And we must develop technical standards that will realize these guidelines effectively and efficiently. This will not be easy. Unlike every other major medium, the Internet is a collectively owned and managed enterprise. Whereas a broadcast television network controls and maintains rigorous standards for everything a consumer sees on its channel, an Internet page is a cobbled-together assembly of parts, managed by perhaps dozens of independent businesses, each contracted individually by the publisher, agencies, and marketers. Some of these entities supervise the content you see; some administer and analyze the invisible data that governs, measures, and optimizes how and to whom the content is delivered. This decentralized cauldron of innovation requires a new set of guiding principles. That is why the IAB and the IAB Tech Lab developed the LEAN Principles. LEAN stands for advertising and ad operations that are light, encrypted, AdChoices-supporting, and non-invasive. We believe LEAN will be as important to the future of the digital advertising industry as the first IAB Universal Ad Package was to its creation. Scott Cunningham will talk much more about LEAN this afternoon, in the Town Halls, and on this stage tomorrow. But please know this now: We intend to make LEAN the foundation of IAB’s activities for the foreseeable future. And among our very first goals is introducing a public LEAN scoring system by which all publishers, all advertisers, and all agencies will be able to measure their activities against rational, reasonable, and consumer-friendly performance benchmarks. LEAN is the basis for a sustainable advertising ecosystem. We firmly believe that a combination of LEAN advertising and media, and publisher implementation of detection-notice-choice-and-constraint, will limit the impact of ad-blocking. But more importantly, an embrace of LEAN principles will bring this industry back to the rational center – focused on making money, to be sure, but cognizant that successful businesses require long-term attention to and concern for the users themselves. Remember that those users represent all races and creeds, and that their happiness success means your success and happiness, too.