META Meta Platforms Inc

By Mike Shields 

After mounting pressure from the advertising industry , Facebook finally got on board.

Then Google's YouTube also made a commitment.

Now, Snap Inc., on the verge of pricing its massive initial public offering this week, is under pressure from ad buyers to follow suit and have Snapchat's ad metrics audited by the Media Rating Council, the media industry's independent measurement watchdog.

Making advertisers comfortable with the data on how long users watch ads and whether they actually see them on Snapchat's messaging platform could be crucial to the company's growth. Snap is seeking a potential $22 billion valuation in its IPO, and to help live up to that price tag, it needs major marketers to buy lots of ads.

Advertisers say they need data to help them justify shifting their budgets away from digital giants like Facebook and Google or more traditional vehicles like TV. Snap, which sells brands short video ads and location-linked overlays called "geofilters," reported revenue of $404.5 million in 2016, a fraction of Facebook's $27.6 billion in revenue.

Given the precedent set by the industry's two dominant players, Google and Facebook, advertisers are pushing for several other large digital ad platforms -- including Snapchat, Pinterest and Twitter -- to subject their advertising data collection processes to more third-party scrutiny, ideally audits by the MRC.

"Certainly, there'll be pressure on Snap, Twitter, Pinterest, any sort of closed-off, walled-garden platform," said Mitchell Weinstein, senior vice president of ad operations at the media buying firm IPG. "We have clients that will walk away from sites that don't offer independent metrics."

Snap addressed the importance of third-party data vetting in its IPO filing, stating that "advertisers who were spending a lot of money on our products wanted verification that the advertisements they had purchased were actually delivered to our users." That led Snapchat to partner with several third-party ad measurement firms.

However, like with Facebook and YouTube, advertisers would like the MRC to oversee and validate exactly how those third parties are collecting and crunching data from Snapchat.

The MRC has recently discussed the possibility of such an audit with both Pinterest and Twitter, according to people familiar with the matter.

"There have been early conversations between the MRC and several of the other large digital enterprises, but no commitments have been made or timetables set, despite the significance of these organizations within the digital advertising marketplace," said George Ivie, chief executive at the MRC.

He declined to comment about Snapchat specifically, and representatives for Snapchat also declined to comment.

Meanwhile, the Association of National Advertisers, which had previously pushed Facebook to agree to an audit, said it plans to reach out to Snap regarding audits after the trade group's media conference later this week.

During that event, Procter & Gamble's chief marketing officer, Marc Pritchard, again plans to press the industry to adopt transparent practices. In January, he told attendees at the Interactive Advertising Bureau's annual leadership meeting that "the days of giving digital a pass are over," and that it was time for industry to "grow up."

Even as Facebook and Google have rolled out numerous third-party data partnerships, there has been a persistent feeling among buyers that both platforms have kept such data collection at arm's length, and still often serve as their own sources of key advertiser data.

The pressure on digital and social companies to succumb to audits continues to ramp up, particularly as executives like Mr. Pritchard keep pushing the topic.

"Snapchat will have to follow suit," said Eric Warburton, director of ad operations for the media buying agency Horizon Media. "With Procter & Gamble laying down the gauntlet...and with Snap's impending IPO, they can't risk not having accreditation."

Write to Mike Shields at mike.shields@wsj.com

(END) Dow Jones Newswires

March 01, 2017 06:14 ET (11:14 GMT)

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