• by Ken Beaulieu , Op-Ed Contributor, April 8, 2015

There is no shortage of urgent issues affecting the digital media supply chain. From data breaches and bot fraud to piracy and privacy, marketers today face challenges that go well beyond building brands and growing bottom lines. What’s at stake? Fraud alone will conservatively cost the advertising industry an estimated $6.3 billion in 2015, according to a study by the Association of National Advertisers and White Ops.

“2014 was a year of enlightenment for e-commerce that will precipitate seismic changes in 2015,” admits Douglas J. Wood, a partner with Reed Smith LLP and general counsel to the ANA.

Wood, who will present at the ANA Advertising Financial Management Conference, April 26 - 29 in Phoenix, addresses here some of the key issues.

Q. You anticipate a record number of data breaches this year. What can companies and marketers do to prevent such breaches?

A. There’s no foolproof way for a company to prevent data security breaches, but a good start is knowing where all your records containing personal information sit. Get rid of what you don’t need, in a secure way. Have a system to protect the personal information you do keep, one that includes a mix of appropriate controls. A million-dollar firewall deployment won’t protect against an employee thoughtlessly shipping unencrypted tapes that contain Social Security numbers. Requiring all visitors to wear identification tags won’t keep a rogue employee from misusing information he/she has in the course of his/her work. Training and testing employees on data security breaches may not be the whole answer if you rely on contractors to do a lot. However, each of these controls may be part of an overall answer. It takes a team of people from across the enterprise — often with the help of consultants and advisors from the outside — to keep an eye on the big picture of enterprise risk and how it’s being managed.

Marketing is a team sport, often involving many vendors, partners, and contractors. A disproportionate share of data breaches, such as the Target breach, are really supply chain failures. It is, therefore, critical to know who your vendors are, what role they play in the gathering, storing, and use of confidential information, and how good their security is. And while contractual promises from such small organizations are nice to have, knowing that they carry cyber- and other insurance at appropriate levels might be more meaningful.

Q. Last year, the ANA, 4A’s, and IAB jointly launched the Trustworthy Accountability Group (TAG). How will it benefit the industry?

A. TAG has undertaken the task, jointly with all the interested stakeholders, to combat the growing menaces of ad fraud, piracy, and malware that are plaguing e-commerce. Brands can only be protected in a marketplace that is free of: non-human bots that grossly inflate traffic figures and extract millions from marketers for worthless hits; counterfeiters who sell fake goods or divert traffic from legitimate advertisers; fraudsters who siphon money out of media buys; and hackers intent on undermining the ecosystem with malware and viruses. Through a variety of efforts, including certification programs, TAG will begin the process of bringing much needed stability and trust to e-commerce.

Q. How is the industry addressing the problem of patent trolls?

A. Some in the industry have joined a defensive patent aggregation coalition. The objective of such a coalition is to work on behalf of members to eliminate patent threats through the purchase or licensing of patents en masse. These are patents believed to be threats or they can be used to defend against threats. Another approach is to join a “micro pool,” such as those formed by Unified Patents. The objective of the micro pool is to challenge patents, through post-grant administrative proceedings in the patent office, on behalf of members. Yet another approach is the “license on transfer” model. In this arraignment, patent owners form a coalition and agree to license their patents to other members of the coalition if and when they sell to third parties. This reduces the value of the patents to trolls and ensures that coalition members are not sued by trolls on patents that originated with other members.

Q. Since programmatic media buying targets consumers’ online behavior, what are some best practices for ensuring privacy protections?

A. Best practices dictate that marketers periodically update their website privacy policies; track legal and press reports related to online programmatic buying; audit media buying companies with specific attention to controls on programmatic buying; explore offering consent to consumers; institute contractually mandated controls with supply chain suppliers; and demand transparency in costs incurred for the media from its media buying suppliers.