X fired a kill shot at Garm. Now, ad industry collaboration & standards-setting may suffer

The Global Alliance for Responsible Media (Garm), founded in 2019 by the World Federation of Advertisers (WFA) as a nonprofit coalition of industry stakeholders committed to enhancing digital safety and setting standards for brand safety and suitability, is being dissolved.

The news arrived Thursday, just two days after Musk took his beef with the ad industry to new levels. X announced Tuesday – via a video and an open letter published by CEO Linda Yaccarino – that it is suing Garm and the WFA for allegedly conspiring to get its members to boycott X as part of an organized effort to silence conservative voices. It is also pursuing legal action against four top advertisers who were Garm members: CVS Health, Mars, Orsted and Unilever.

A Message to X Users pic.twitter.com/6bZOYPhWVa

— Linda Yaccarino (@lindayaX) August 6, 2024

Explaining the decision, X cited a recent report from the US House of Representatives Judiciary Committee, which said Garm’s activities “rob consumers of choices” and are “likely illegal under the antitrust laws.”

The report detailed “apparent collusion” within Garm and the WFA, whose members control 90% of ad spending globally, “to demonetize platforms, podcasts, news outlets, and other content deemed disfavored by GARM and its members.”

In an open letter published on X, Yaccarino wrote: “The consequence – perhaps the intent – of this boycott was to seek to deprive X’s users … of the Global Town Square.” She claimed that the “boycott” has cost X “billions of dollars.”

The WFA announced Garm’s closure Friday morning; in a statement published to its website, the organization said: “Garm is a small, not-for-profit initiative, and recent allegations that unfortunately misconstrue its purpose and activities have caused a distraction and significantly drained its resources and finances. WFA therefore is making the difficult decision to discontinue Garm activities.”

Is collusion, or ‘Musk's antics’, to blame for ad exodus?

X’s decision to pursue legal action against the WFA, Garm and its members has been rebuked by many ad industry leaders.

“Litigation should not be allowed to be weaponized in a way where organizations can be hamstrung by overwhelming and unwarranted legal pressures from better funded plaintiffs,” says Ruben Schreurs, chief strategy officer at Ebiquity, a media consultancy. “It sets a dangerous precedent in general, but now specifically in the advertising industry. Brands are free to decide where to invest their advertising budgets, based on the parameters that matter to their organization.”

In the same vein, Schreurs argues, trade bodies and cross-industry initiatives like Garm should be free to develop their own standards and frameworks “to classify advertising inventory as they see fit.”

And although X alleges that collusion at Garm and the WFA cost the platform billions of dollars, there is strong evidence to suggest that advertisers pulled their investments from the platform for a variety of reasons – long before Garm attracted scrutiny from US lawmakers.

In fact, advertisers began slashing ad spend on X in the days immediately following Musk’s $44bn acquisition of the platform (then called Twitter) in November of 2022, when executive resignations, mass layoffs and general unrest at the company gave them cold feet. Platform changes, including an overhaul of the site’s blue check verification system (now under investigation in the EU) and a lax approach to content moderation that ushered in an influx of hate speech and misinformation onto the app, saw advertisers sour further. Musk’s own controversial comments ostracized them, too; brands like Disney, Apple, IBM and Paramount, pulled ad spend from the platform in light of the billionaire’s endorsement of antisemitic comments on the platform.

During the first year of Musk’s ownership of X, the platform lost around 55% of its ad revenue year-over-year every month, according to data provided to Reuters.

“Everyone knows that [some kind of collusion at the WFA] wasn't the reason advertisers left, in any way, shape or form. That had already happened, and it was entirely due to Musk’s antics,” says Lou Paskalis, chief strategy officer at media watchdog Ad Fontes Media.

And Musk’s hot-and-cold attitude towards the advertising community has not aided his cause. He told advertisers who had withdrawn from X, “Go fuck yourself” in an interview last November with New York Times columnist Andrew Ross Sorkin. Just days earlier, X had sued media watchdog Media Matters for a report it published documenting instances of ads running alongside hateful content on X (the lawsuit has since been dropped).

But at various points in time, Musk has attempted to extend an olive branch to the industry, hosting live-streamed roundtables with industry leaders, reintroducing a ‘client council’ of ad execs and even showing up onstage in June with WPP CEO Mark Read at adland’s biggest annual event, the Cannes Lions International Festival of Creativity.

What is lost in Garm's shutdown

Now, industry leaders are mourning the death of Garm, which spearheaded efforts to enhance brand safety on the open web.

“We are disappointed to hear that the Global Alliance for Responsible Media is being discontinued,” Paul Bainsfair, the director general at the Institute of Practitioners in Advertising (IPA), a UK trade body, said in a statement. “Garm served an important role in tackling illegal or harmful content online, raising standards across the board in the process. Illegal and harmful content on digital media platforms remains a significant challenge for our industry, and one that will require cross-industry collaboration to solve.”

It’s a sentiment shared by Ebiquity’s Schreurs, who tells The Drum: “Independent trade bodies such as the WFA, ANA, ISBA, 4A’s and others, are among the very few places where common definitions around key industry issues can be discussed in a safe and legal environment.”

But experts aren’t just speaking out against Garm’s dissolution – they’re also ringing a warning bell over the broader implications of the decision.

For one, many say it could sow fear among other trade groups and initiatives, and stall their progress. “This is a very dangerous precedent,” says Ad Fontes Media’s Paskalis.

He predicts that Garm’s shutdown will have “a chilling effect on trade associations” as a whole. “Trade associations play a vital role for the advertising community in the general area of creating and maintaining a marketplace,” he says.

As an example, he points to the Interactive Advertising Bureau’s efforts to standardize ad unit sizes at a time when digital media was still something of a wild west. “It really addressed the problem. This has been the role of trade associations forever. [They help ensure] transactions in a clean environment and that things that are being measured are being measured correctly. There's accountability.”

Now, Paskalis says, trade bodies are likely to be walking on eggshells. “All the trade associations now have this additional piece of calculus, which essentially says, ‘Collaboration can be construed as collusion, so maybe we shouldn't take this on. Maybe we should narrow the scope … of what we're going to do.’”

As a result, efforts undertaken by advertising trade groups – which include everything from standardizing measurement across channels to quantifying carbon emissions in the adtech supply chain – may be slowed or even derailed, some say.

“These [trade] bodies could be impaired significantly in their ability to drive progress,” says Schreurs.

For instance, he says, concerted, collaborative efforts expose the industry’s spammy ‘made for advertising’ (MFA) sites have resulted in positive change in recent months. (Forbes, for one, which was found to be operating a secretive MFA subdomain, removed the site when it was outed). The discontinuation of Garm bodes poorly for the future of industry-wide “change investment strategies,” Schreurs says.

The idea is echoed by Paskalis. “At the very least, it slows down” other cross-industry initiatives, he says. “[Trade associations now have to] reassess the work that they've done and the direction they're going and say, ‘Does this create vulnerability?’ Now you’re going to have to have a lawyer in the room [for any of these committee meetings], and you’re gonna have to be very careful about something that could be construed as collusion, even though it's not.”

Garm’s sudden death will also have a ripple effect for advertisers at brands and agencies everywhere. “It's a bad outcome for advertisers,” Paskalis says, “because now they're going to have to work much harder to figure out, ‘What are the issues that we need to mitigate in terms of brand safety and suitability, and how do we think about them?’”

And a potential knock-on effect could be reticence on the part of brands to join trade associations or chip in on joint efforts for fear of being targeted or sued, like Unilever and CVS Health are now. “Nobody's going to want to participate in these industry initiatives,” Paskalis says. “And if no advertiser participates … then you don't have the voice of the advertiser. And that's where all the money comes from.”

Of course, despite widespread efforts to create common standards in the industry, decisions about media investments and brand safety will always, ultimately, boil down individual brands, who must determine their own values, risk tolerance and priorities.

In some ways, says Marissa Thomas, CMO of Good-Loop, an ethics-focused digital advertising platform, this truth suggests that Garm’s closure “means very little for the industry at large.”

As she puts it: “Good marketers will continue to make sure their brand behaves in a way that is true to its values while getting results. So if X feels brand safe [for a given brand] – by which I mean, they’re happy that their brand values aren’t in jeopardy by supporting X through ad spend – and they need cheap reach, they’ll use it. If they're after something else, they’ll use a different channel.”

The role and effectiveness of ad industry standards

For some, however, the disbandment of Garm raises broader questions about the effectiveness of voluntary industry standards.

While Garm’s tools, including its Brand Safety Floor and Adjacency Standards Framework – which help advertisers develop their own custom safety parameters – can still be employed, are they providing real value to advertisers and publishers?

Not everyone is sold on the idea. Arielle Garcia, director of intelligence at adtech watchdog Check My Ads, argues that frameworks like those established by Garm were always flimsy and “confuse[d] brand safety with mere content adjacency.” And that fact, she suggests, was likely by design, as some industry stakeholders “benefit from keeping standards limited in scope, loophole-ridden and toothless.”

She suggests that now is the time “to fix what has been broken, and define new standards” that truly work on behalf of both brands and publishers.

In her view, it’s advertisers themselves who must take on the mantle. “Advertisers must be in the drivers’ seat, so that their standards actually reflect their needs and expectations,” she says. “This means being more vigilant against the undue, heavy-handed influence of self-interested adtech companies and agencies. It’s time to think twice about whether their trade groups truly represent advertiser interests, or if they have been compromised by big tech’s influence and the allure of sponsorship dollars.”

Others, like Paskalis, defend the standards set forth by Garm. “The work was done. The work is valuable. The frameworks can still be applied, and hopefully they will, because an awful lot of work went into those – years of work. [Rakowitz’s] vision was, ‘I need to build a consensus among advertisers, among agencies, among publishers and a bunch of other constituents who have a seat at the table here. And he worked with them one by one to make sure their views were represented, that they felt included, that their fingerprints were all over [those standards].”

If one thing is clear, it’s that Musk’s actions at X have not only disrupted the advertising world, but have also exposed deep rifts within it. The question now is whether the industry can unite to defend its common standards, or whether it will continue to splinter under the pressure of powerful disruptors like Musk.

And as far as X is concerned, the consensus among ad leaders is clear: suing industry trade groups is unlikely endear the platform to big-budget advertisers. In fact, it will likely repel them more.

Andy Oakes, the cofounder and CEO of PR firm Bluestripe Group, replied to Linda Yaccarino’s announcement of the lawsuit writing in a post on Thursday: “...Linda, how is this a win? Do you honestly think that this will make any of those who were involved in GARM want to spend with you?”

Also Linda, how is this a win? Do you honestly think that this will make any of those who were involved in GARM want to spend with you? — Andy Oakes (@andyoakes) August 8, 2024

As Paskalis puts it: “There's no reason that a media buyer would ever make a recommendation to a management team to go back to X now, particularly if they've been sued. That ship has sailed on advertising on X.”

Whether X will drop its case against the WFA and CVS Health, Mars, Orsted and Unilever remains unclear.

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