The ABC-e responds to pull-out of IOL and e-MEDIA24

Below is the open letter to Russel Hanly, GM of e-MEDIA24, Howard Plaatjes, MD of IOL, from Craig Farham, Chairperson, ABC-e South Africa:

24 October 2002

To: Russell Hanly - GM e-Media24
Howard Plaatjes - MD IOL

From: Craig Farham - Chairperson, ABC-e South Africa

Subject: Future participation in ABC-e quarterly reporting

I acknowledge your letter of 18 October 2002.

I am disappointed, not only that you have made the decision to discontinue your participation in ABC-e quarterly reporting, but also with the way that the issue has been dealt with.

ABC-e is a self-regulatory organisation, run by its members, for its members. Neither of you have personally attended a single ABC-e meeting, where the issues you raise have been discussed at length, nor made any public comments about the ABC-e press releases or minutes of meetings, yet you chose to release your open letter to the press at the same time as sending a personal copy to ABC-e. This gave ABC-e no chance to respond to you individually or to answer your letter in the press. However, I notice that M-Web had prior access to your letter, and published a supporting response at the same time that your letter appeared. Why was ABC-e not extended the same courtesy?

I am also disappointed that having made your criticisms of ABC-e, which I will address below, you offer no positive solutions or alternatives. This industry can only grow by dialogue with all its members, and criticizing without any attempt to provide solutions can only be detrimental to all concerned.

Finally, I am disappointed that IOL has had a complete change of heart in the past four weeks, with no further effort to discuss the issues with ABC-e. In an email to me dated 20 September 2002, Howard stated: "As you may be aware by now we are adopting the IFABC standards. The fact that we were present at your [technical workshops in September 2001] and still have not implemented the standard is a failing on our part".

To address each of the points you raise in your letter of 18 October:

1. ABC-e quarterly report

The ABC-e report has been in essentially the same format for over a year, and was based on the original ABIS reports. The ABC-e membership agreed to report only page impressions and unique users from the list of IFABC metrics (refer www.ifabc.org/web/index.html), and to add any other measures as required by the advertisers or media owners (see below). At no time has any criticism of the format of the report been voiced by ABC-e's members or the press (who manage to extract a great deal of information from these reports - for example, see Tim Woods' Internet media war stays hot). I welcome any suggestions you have for reporting additional IFABC metrics, or for improving the format of the report.

To address the issue of explaining deviations in page impressions and unique users from period to period, ABC-e has tabled a motion to introduce a clause that all categories of the ABC-e report must contain a proprietors/publishers statement - i.e. media owners must explain all deviations, regardless of size, in every report (see attached ABC-e By-Laws).

2. Credibility of ABC-e

ABC-e is building a standardized, objective and independent currency recognised worldwide - standards by which the equitability of advertising rates can be judged by the media. ABC-e therefore has an essential role to play in maintaining the credibility of Internet advertising.

ABC-e currently provides a circulation figure based on audited page impressions and unique users, and has also tabled a motion to include visitor sessions as a third measure to be reported, to provide a gauge of visitor frequency.

On the other hand, demographic information about website users can only be obtained from (independent) research, which is not within the ABC-e mandate. ABC-e looks forward to closer cooperation and interaction with research houses, as ABC-e circulation figures and user demographic data will complement one another, as is the case with SAARF (who publish AMPS) and the ABC (who publish print circulation figures). For this reason, ABC-e has been encouraging the industry to negotiate with SAARF to include Internet-related questions in AMPS, and to have objective web site traffic and demographic data included in the Telmar and IMS systems (see attached ABC-e press release, 29 May 2002). ABC-e also welcomes the establishment of the Online Media Association, and looks forward to working alongside them in much the same way as the Print Media Association works alongside the ABC in the traditional media.

The distinction between objective circulation figures (website traffic) and research-based user demographic information has been consistently ignored by the industry, or even deliberately blurred at times. This has contributed greatly to the confusion in the online marketplace.

ABC-e must take some responsibility for not doing enough to educate the advertisers and media owners about this important distinction, but as ABC-e is made up of the industry players (including yourselves), we all share this responsibility. Surely the failure of online media owners to make sufficient revenue cannot be blamed on ABC-e?

3. Decline in membership

ABC-e has had numerous discussions about its declining membership, and recently organised very successful conferences in Cape Town and Johannesburg as part of a recruitment drive for membership. Since the conference, seven companies have joined ABC-e, applied for membership, or requested information about the organisation and its functions, compared to five or six requests for information in the previous 12 months.

Of the members who have ceased reporting their figures to ABC-e in the past 2 years, several were in the M-Web stable (e.g. eM&G, Kalahari.net, M-Net, Supersport), while a number of others have either gone out of business or changed their business model (e.g. Africam, Woza, EasyInfo, Webmail, MTN E-Business).

It is interesting to note that each of the large portal sites have resigned soon after losing their top spot in what has unhappily become an ABC-e "log table" - M-Web resigned in Q1 2001 after iafrica.com recorded higher numbers of page impressions (after removing refreshes) in Q4 2000; iafrica.com left in Q1 2002 after News24 reported the highest number of unique users in Q4 2001; and now eMedia24 and IOL have both withdrawn a month after a dispute over measurement and numbers of unique users. The traffic figures should be there as a guide for advertisers, but all the players need to participate for the figures to be of any meaningful comparative value.

With regard to serving the interests of the online publishing community, I must point out that the ABC-e has a tripartite membership of advertisers, advertising agencies and publishers, and that "the ABC was established in this country, as in all countries around the world, for the protection of advertisers" (ABC documentation, p3). That is, and will remain, the primary concern of ABC-e. The media owners cannot be allowed to dominate the ABC-e, and should not be allowed by the advertisers (or legal profession) to disregard international auditing standards to serve their own ends (see attached ABC-e audit process).

One of the themes in my keynote presentation at the ABC-e conference was that in the connected economy, competition is just one of many factors influencing the business and social community - cooperation and building mutually beneficial networks are equally, if not more important (see attached presentation). It is a fundamental property of networked systems that the more and greater variety of members there are in the system, the stronger, more flexible, innovative and resistant to external disturbance the web becomes. I also argued that in an established web of trust, the bottom line is win-win, because most businesses in an economic web succeed if others also succeed.

In the current shaky IT climate, and particularly in the light of the corporate governance cases that have recently received huge press coverage worldwide, I would have thought that the major players in the South African online media industry would welcome transparency and international standards and work hard to promote these standards to the advertising industry. ABC is the only organisation in South Africa to have the mandate for releasing advertising figures, and by stepping outside the recognised structures for reporting advertising you are bucking the international trend.

I urge you to reconsider your decision to work outside of ABC-e, and to participate in the debate of the issues and implementation of the steps required to grow the industry as a whole.

I look forward to meeting both of you with Greg Couvaras, Auditor General of ABC, on Friday 25 October to discuss these and related issues.

Yours sincerely,

Craig Farham