Gannett: Inaccurate information to advertisers corrected, was unintentional 'human error'

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Gannett Co. Inc., which owns USA TODAY and local news sites in 45 states, said Wednesday it inadvertently passed along inaccurate data to some online advertisers for nine months before an employee caught the error last week.

The problem has been corrected, the company said.

Gannett issued a statement about the issue in response to a Wall Street Journal article published on Tuesday that suggested the media company had “intentionally shared inaccurate information to advertisers.” Gannett described the problem as “a caching error” when the company implemented changes to how data was passed from the publisher to ad exchanges.

"Gannett sincerely regrets inadvertently passing along the incorrect data parameter,'' the company's statement said.

As a result, digital ads placed with Gannett’s ad auction system did not always appear on the specific USA TODAY and USA TODAY Network sites the advertisers thought they were buying ad space for, said Gannett’s Chief Product Officer Kris Barton. Sometimes, they were also not placed next to the kind of content they had paid for. But in all cases, he said, ads remained within the USA TODAY Network sites.

"It was a human error. We discovered it ourselves and fixed immediately," Barton said.

While he said Gannett made the discovery independently and fixed the issue last week, two researchers also had been studying the discrepancy for a couple of months. They shared their findings with the Wall Street Journal.

The error comes as the company is growing its digital-only subscriber base. Digital-only paid subscribers grew 49% and surpassed 1.6 million in Gannett’s fourth quarter, resulting in $27.6 million from digital-only circulation revenue.

The revenue associated with third-party “programmatic” or automated advertising exchanges that potentially used the mislabeled information was less than $10 million in total, Barton said.

“It is a very small scale in the grand scheme of our revenue,” Barton said, adding that he couldn’t get into the specifics of overall digital ad-generated revenue.

Krzysztof Franaszek, founder of Adalytics Research, delved into the Gannett data to help fellow researcher Braedon Vickers, who initially spotted the error. Franaszek says, in a hypothetical situation, misreporting ad inventory can allow a publisher or ad exchange to receive more ad revenue than would be otherwise possible.

However, with Gannett, that did not seem to be the case, he says.

“We were not able to deduce what material benefit, if any, Gannett (as an organization) would obtain from mislabeling their ads,” he said in messages exchanged with USA TODAY over Twitter.

For instance, Franaszek observed there were instances where the reported URL was USA TODAY, but the actual URL was a local news site, such as the IndyStar. But they also saw small, local brands whose ads ended up on USA TODAY.

“It’s ostensibly plausible that certain advertisers specifically want to reach the audience of IndyStar, and not that of a nationwide publication like USA TODAY,” he said.

As far as the rate difference between USA TODAY and other sites, it could be higher or lower depending on the situation, said Gannett’s Barton.

“In some cases, you want a very specific local audience, that's going be more expensive than the national more generic audience,” he said.

Douglas Arthur, an analyst with Huber Research Partners who has been covering Gannett since the late ‘80s, called the incident “a pretty big screw up” but one the media giant could manage.

“For a company that is in the throes of a very active transition – at a critical transition – to digital advertising and digital circulation, this is a little bit of a setback,” Arthur said. “It's not a killer, it's a setback. They can handle this.”

Arthur expects Gannett will need to issue rebates or refunds to advertisers who had misplaced ads and will need to "prove to advertisers that they've corrected the problem."

The kinds of problems identified in this case are not unique to Gannett, analysts said. Arthur pointed out that Facebook has misreported audience numbers to advertisers in the past.

Ad placement systems can be complicated and easy to get wrong, says David Chavern, the president and CEO of News Media Alliance, the news industry's largest trade organization.

“This is a very technical area in which it's easy to screw up the tagging. And it appears that Gannett did that, but they also fixed it themselves,” says Chavern. “It appears they mislabeled some chunk of their inventory for a period of time.”

As to how much this might end up costing Gannett, Chavern said it remains to be seen.

"I don't know that there's been any assessment as to whether there's been any negative impact to the advertisers," he said.

Barton said Gannett has learned from the mistake and is taking measures to improve the system.

“We have reevaluated our QA (quality assurance) process and are implementing new procedures to ensure that errors like this do not happen in the future,” said Barton.

Contributing: Bailey Schulz.

This article originally appeared on USA TODAY: Gannett corrects ad mistake, says 'human error' caused inaccurate data

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