ADVERTISING & MARKETINGResearch Brief

Sustainable Industry Classification System™ (SICS™) #SV0301

Research Briefing Prepared by the

Sustainability Accounting Standards Board®

December 2014

www.sasb.org© 2014 SASB™

™

I N D U S T RY B R I E F | A D V E R T I S I N G & M A R K E T I N G

SASB’s Industry Brief provides evidence for the material sustainability issues in the Advertising &

Marketing industry. The brief opens with a summary of the industry, including relevant legislative

and regulatory trends and sustainability risks and opportunities. Following this, evidence for each

material sustainability issue (in the categories of Environment, Social Capital, Human Capital,

Business Model and Innovation, and Leadership and Governance) is presented. SASB’s Industry

Brief can be used to understand the data underlying SASB Sustainability Accounting Standards.

For accounting metrics and disclosure guidance, please see SASB’s Sustainability Accounting

Standards. For information about the legal basis for SASB and SASB’s standards development

process, please see the Conceptual Framework.

SASB identifies the minimum set of sustainability issues likely to be material for companies

within a given industry. However, the final determination of materiality is the onus of the

company.

Related Documents

• Advertising & Marketing Sustainability Accounting Standards

• Industry Working Group Participants

• SASB Conceptual Framework

INDUSTRY LEAD

Nashat Moin

CONTRIBUTORS

Andrew Collins

Stephanie Glazer

Anton Gorodniuk

Jerome Lavigne-Delville

Himani Phadke

Arturo Rodriguez

Jean Rogers

Evan Tylenda

Gabriella Vozza

ADVERTISING & MARKETINGResearch Brief

SASB, Sustainability Accounting Standards Board, the SASB logo, SICS, Sustainable Industry Classification System, Accounting for a Sustainable Future, and Materiality Map are trademarks and service marks of the Sustainability Accounting Standards Board.

INTRODUCTION

The power of persuasion of the Advertising &

Marketing industry is undeniable. Consumers

rely on ads to inform them of their choices in

the market place, whether they are purchasing

everyday items or luxury goods. With

advertisements on televisions, magazines,

billboards, computer screens, and smart

phones, consumers are exposed to ads at nearly

every waking hour. As such, the industry can

play a key role in society as an agent of social

change.

Advertising and marketing companies that are

able use their influential abilities responsibly

can be positive contributors to society. In the

age of big data and targeted advertising,

companies with strong consumer privacy

policies are better positioned to mitigate risk

from regulatory scrutiny and public concern

regarding privacy. Management (or

mismanagement) of material sustainability

issues, therefore, has the potential to affect

company valuation through impacts on profits,

assets, liabilities, and cost of capital.

Investors would obtain a more holistic and

comparable view of performance with

advertising and marketing companies reporting

metrics on the material sustainability risks and

opportunities that could affect value in the

near- and long-term in their regulatory filings.

This would include both positive and negative

externalities, and the non-financial forms of

capital that the industry relies on for value

creation.

Specifically, performance on the following

sustainability issues will drive competitiveness

within the Advertising & Marketing industry:

• Ensuring truth in advertising and

protecting young children;

• Self-regulating use of consumer data

for data privacy in the face of evolving

regulations and public concern; and

• Managing a diverse workforce to foster

innovation and create effective

campaigns.

INDUSTRY SUMMARY

The Advertising & Marketing industry is

comprised of companies that create advertising

campaigns for use in media, display, or direct

SUSTAINABILITY DISCLOSURE TOPICS

SOCIAL CAPITAL

• Advertising Integrity

• Data Privacy

HUMAN CAPITAL

• Workforce Diversity & Inclusion

mail advertising and related services, including

market research.I

Advertising and marketing companies are

engaged primarily by businesses selling

consumer products, entertainment, financial

services, technology products, and

telecommunication services.1, 2 Larger

advertising companies are structured as holding

companies owning multiple agencies that

provide a wide range of services. These services

include custom publishing, brand consultancy,

mobile and online marketing, and public

relations.3 For any ad campaign, the same

company may be engaged in all aspects, from

graphic arts and content creation to data

analytics, marketing research, and media

planning and buying. Or, it may be in charge of

only certain aspects.

Publicly traded companies listed in global

exchanges, as well as those traded over-the-

counter, generated about $180 billion in 2013,4

while global ad spending exceeded $500

billion.5 The industry is impacted by global

economic conditions, such as poor financial

performance, which generally leads to a decline

in ad spending.6, 7 Competitiveness depends on

creative ability, client requirements, and the

ability to win new contracts.8 The industry

works intimately with the media to reach

audiences and drive advertising revenue.

Television’s share of global ad spending has

been steady at about 40 percent. Internet ad

I Industry composition is based on the mapping of the Sustainable Industry Classification System (SICSTM) to the

spending has grown to 20 percent of overall

spending in 2013 from a mere 5 percent in

2005. That is largely at the expense of

newspapers and magazines, which have

declined from 29 and 13 percent to 17 and 8

percent, respectively, during the same period.9

Twenty-five percent of industry sales comes

from advertising for print, broadcast, and

online media; 15 percent from direct mail

advertising; 10 percent from public relations.

The rest is distributed among other services

including display advertising, reselling

advertising time or space, and selling

advertising on behalf of media outlet owners.10

The U.S. is the world’s largest advertising and

media market, generating 44 percent of global

industry revenue.11 For example, Omnicom

generated about half its revenue from the

U.S.12 Similarly, 55 percent of the Inter Public

Group’s revenue came from the U.S., followed

by Asia-Pacific and Continental Europe at 12

percent each. Omnicom leads the U.S. market

with a 22 percent share, followed by WPP, a

British company, with 16 percent.13 While

advertising agencies and market research firms

suffered a decline when consumer spending

dropped and advertising budgets were cut

during the most recent recession,14 advertising

agencies’ revenue is now expected to grow

again.15 The U.S. advertising market has long

been mature, and companies are looking to

faster-growing markets, particularly the BRIC

(Brazil, Russia, India, and China) countries.16, 17

Bloomberg Industry Classification System (BICS). A list of representative companies appears in Appendix I.

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Ad spending in emerging markets is projected

to grow by 11.6 percent for 2014 compared to

a meager 2.1 percent growth in major

developed economies.18 In particular, mobile

advertising in China is forecast to reach $4.2

billion by 2017, jumping 478 percent during

the four-year period from 2014 to 2017.19

New media has become a central platform for

the industry as traditional media campaigns are

losing their efficacy.20 Ad spending on digital

media is expected to drive annualized revenue

growth at 3.4 percent to $39.3 billion by 2018.

Digital tools, such as social media, have

become essential in accurate demographic

targeting.21 Digital media has made it easier to

acquire reliable performance metrics. It has also

increased the number of affordable alternative

to agencies22 and offers higher margins.23 The

decline in traditional media, as well as the

improved analytics of campaigns, have resulted

in a shift from placed advertisements’

traditional set-rate commission to incentive-

based pricing models.24 Niche agencies are

entering the industry with the growth of

fragmented markets driven by digital,

increasing the number of operators. To stay

competitive, incumbent companies have been

acquiring agencies and specialist firms, such as

market research firms.25, 26

II This section does not purport to contain a comprehensive review of all regulations related to this industry, but is

LEGISLATIVE AND REGULATORY TRENDS IN THE ADVERTISING & MARKETING INDUSTRY

The regulatory landscape for the Advertising &

Marketing industry is a combination of self-

regulation and indirect regulation through

federal agency oversight of food and drug

advertising, communication, and media for

consumer protection.27 The following section

provides a brief summary of key regulations

and legislative efforts related to this industry.II

In 1971, a group of ad agencies founded the

National Advertising Review Council (now

called the Advertising Self-Regulatory Council)

to establish robust self-regulatory codes and

sanctions agreed upon within the industry.28, 29

The Advertising Self-Regulatory Council (ASRC)

establishes industry self-regulatory policies and

procedures, like the National Advertising

Division (NAD), Children’s Advertising Review

Unit (CARU), National Advertising Review Board

(NARB), Electronic Retailing Self-Regulation

Program (ERSP) and Online Interest-Based

Advertising Accountability Program

(Accountability Program.)30 One example is the

International Code of Marketing and Social

Research Practice, which helps ensure that

participants in surveys are guaranteed the

option for total confidentiality of the

information they provide. The code also

intended to highlight some ways in which regulatory trends are impacting the industry.

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restricts business from selling to participants as

part of the survey and from releasing their

names and personal details. Major industry

associations, the Council of American Survey

Research Organizations, and the Market

Research Association, as well as their members,

have committed to adhere to the code.31

The International Chamber of Commerce also

maintains the Consolidated Code on

Advertising and Marketing to guide best

practices for industry practitioners.32 In addition

to industry efforts, the rise of social media has

empowered consumers by giving them a voice,

allowing them to become increasingly involved

in policing best practices.33

However, self-regulation comes under scrutiny

when companies violate the guidelines set by

industry associations. For example, the role of

advertising in the childhood obesity epidemic

has been a growing concern, and industry best

practices require truthful marketing. However,

fast food companies McDonald’s and Burger

King came under fire when their ads

emphasized toy giveaways and movie tie-ins to

kids instead of promoting the food itself. While

the industry’s Children’s Advertising Review

Unit (CARU) found the ads in violation of

industry standards,34 the ads have emblazoned

the discussion around child-targeted advertising

and self-regulation.

Various government entities—like the Federal

Trade Commission (FTC), the Food and Drug

Administration (FDA), and the Federal

Communications Commission (FCC)—actively

enforce guidelines on the advertising and

marketing of food, drugs, dietary supplements,

alcohol, tobacco, and high-tech products.35 The

FTC oversees truth-in-advertising laws that

require advertising to be truthful, non-

misleading, and backed by scientific evidence,

particularly when dealing with claims that

impact consumers’ health or finances. The

FTC’s Deception Policy and Unfairness Policy

provide guidelines on truthful and non-

misleading advertising.36 One case in March

2009 brought pharmaceutical drug

manufacturers under intense scrutiny when the

FDA declared that manufacturers had violated

guidelines for disclosing risks associated with

taking the medications. Since then,

pharmaceutical search advertising has

plummeted 84 percent.37

The FTC also oversees the increasing number of

products and services that are labeled ‘green’

or ‘natural.’ By order of the FCC, companies

must avoid general, unqualified claims and

provide reliable scientific evidence to support

assertions including claims regarding carbon

offsets, certifications, compostability,

biodegradability, non-toxicity, recyclability, and

renewable energy and materials.38

Personal privacy is also a focus of existing and

proposed laws.39 These regulations can

significantly impact the way industry

practitioners conduct business. In the U.S., the

FTC is also charged with ensuring compliance

with privacy laws. Additional laws, like the

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Family Educational Rights and Privacy Act, the

Right to Financial Privacy Act, and the

Electronic Communications Privacy Act, all limit

federal and corporate access to individuals’

records. Furthermore, unauthorized access to

this information creates significant liability risk

for these companies.40 The U.S. is one of two

OECD member countries that has not

implemented baseline privacy protection for

consumer data.41, 42

One such baseline framework is the European

Union’s Data Protection Directive (DPD). In

addition to the DPD, the EU is currently

considering new legislation that would enact

the strictest laws on data collection, use and

protection. Increasingly strict EU regulations on

consumer privacy have increased the costs for

US companies doing business in the EU.43 In

response, the U.S.-EU Safe Harbor Framework

provides guidelines for the lawful transfer of

personal data outside the EU.44 As advertising

and marketing companies rely on obtaining

personal data to inform their campaigns, these

laws can further affect the efficacy and

profitability of internet-based and digital

marketing.45, 46

SUSTAINABILITY-RELATED RISKS AND OPPORTUNITIES

Industry drivers and recent regulations suggest

that traditional value drivers will continue to

impact financial performance. However,

intangible assets such as social, human, and

environmental capitals, company leadership

and governance, and the company’s ability to

innovate to address these issues are likely to

increasingly contribute to financial and business

value.

Broad industry trends and characteristics are

driving the importance of sustainability

performance in the Advertising & Marketing

industry:

• Managing social externalities:

Through its power of persuasion,

Advertising & Marketing companies can

act as an agent of change or

perpetuate the status quo. The industry

must act responsibly in order to

minimize negative social externalities of

marketing.

As described above, the regulatory and

legislative environment surrounding the

Advertising & Marketing industry emphasizes

the importance of sustainability management

and performance. Specifically, recent trends

suggest a regulatory emphasis on consumer

protection, which will serve to align the

interests of society with those of investors.

The following section provides a brief

description of each sustainability issue that is

likely to have material implications for

companies in the Advertising & Marketing

industry. This includes an explanation of how

the issue could impact valuation and evidence

of actual financial impact. Further information

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on the nature of the value impact, based on

SASB’s research and analysis, is provided in

Appendix IIA and IIB. Appendix IIA also provides

a summary of the evidence of investor interest

in the issues. This is based on a systematic

analysis of companies’ 10-K and 20-F filings,

shareholder resolutions, and other public

documents. It is also based on the results of

consultation with experts participating in an

industry-working group convened by SASB.

A summary of the recommended disclosure

framework and accounting metrics appears in

Appendix III. The complete SASB standards for

the industry, including technical protocols, can

be downloaded from www.sasb.org. Finally,

Appendix IV provides an analysis of the quality

of current disclosure on these issues in SEC

filings by the leading companies in the industry.

SOCIAL CAPITAL

Social capital relates to the perceived role of

business in society, or the expectation of

business contribution to society in return for its

license to operate. It addresses the

management of relationships with key outside

stakeholders, such as customers, local

communities, the public, and the government.

It includes issues around access to products and

services, affordability, responsible business

practices in marketing, and customer privacy.

The Advertising & Marketing industry connects

brands and products to consumers. As such, ad

agencies have a responsibility to ensure the

truthfulness of what is communicated about

product and services. In the U.S. and abroad,

consumer protection laws have rules against

deceptive or misleading advertising. Advertising

claims may also be subject to industry-specific

laws and regulations. While marketing products

and services to specific demographics is not

new, the rise of online advertising and use of

consumer data for more targeted advertising

has raised public concern around privacy.

Advertising Integrity

All businesses have a legal responsibility to

ensure that advertising about their products

and services is truthful and not deceptive.

Additionally, consumer protection laws regulate

advertising to vulnerable populations, like

children, and marketing of specific products,

like tobacco and alcohol.

Regulations can directly or indirectly affect the

scope, content, and manner of presentation of

advertising, marketing, and corporate

communications services. For example, the

FTC’s truth in advertising regulations apply to

all aspects of ad campaigns in the U.S. Ad

agencies and advertisers must ensure that the

content of ads is not misleading or deceitful.

This includes claims, endorsements, and

testimonials. Additionally, the FTC has specific

guidance on native advertising or sponsored

content, where advertisements appear inline in

a news article or in links above or below web

content. Advertisers must clearly distinguish ads

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so that consumers are able to differentiate it

from the surrounding content. Native

advertising is a segment that is growing along

with online advertising. Consumer protection

laws provide guidance and restrictions on

advertising to children. There are strict

guidelines on advertising regulated products,

like alcohol, tobacco, and drugs.

While much of the burden of ensuring

compliance with these regulations lies on the

advertiser, the advertising agency also plays a

vital role in creation of ad content and advising

their client regarding the applicable

regulations. The FTC also investigates the

involvement of the ad agency in any deceptive

advertising. Advertising and marketing

companies are keenly aware of these

regulations and concerns and many participate

is self-regulatory programs that address these

areas. Company performance in this area can

be analyzed internally and externally through

the following direct or indirect performance

metrics (see Appendix III for metrics with their

full detail):

• Amount of legal and regulatory fines

and settlements associated with false,

deceptive, or unfair advertising;

• Percentage of campaigns reviewed for

adherence with the Advertising Self-

Regulatory Council’s (ASRC) standard,

percentage of those in compliance; and

• Percentage of campaigns that promote

products or services deemed socially

harmful and subject to restrictions or

taxes on use.

Evidence

Advertising campaigns make product claims

aimed at winning customers by demonstrating

a competitive advantage. The FTC has oversight

of the truthfulness of advertising, and that

includes holding advertising agencies

accountable. The Federal Trade Commission

Act requires that “(1) Advertising must be

truthful and non-deceptive; (2) Advertisers

must have evidence to back up their claims;

and (3) Advertisements cannot be unfair.”47

The FTC dictates that advertising agencies have

a responsibility to independently vet the

credibility of advertising claims, and that they

may not rely on the advertiser’s assurance. In

determining liability, the FTC examines the

extent of the agency’s involvement in creating

a questionable advertisement and whether the

agency knew, or should have known, that the

advertisement in question contained false or

deceptive information.48 In cases where the FTC

determines that an advertisement is making

false or deceptive claims, the FTC can issue

cease and desist orders, civil penalties, and

mandate corrective advertising or disclosures.49

The line between highlighting the benefits of a

product, and overstating them in a way that

regulators would deem to be untruthful, is a

fine one, and the legal fees to fight such

accusations can be substantial. While these

actions most directly impact the brand or

advertiser, it may harm the agency-client

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relationship. The FTC also issued guidance

regarding endorsements and testimonials.

The FTC regularly investigates advertisements

with alleged false or misleading claims. In a

guideline to media companies, the FTC

highlights the importance of screening ads for

anything that may be misleading or untrue.50

One of the first litigated cases involved

advertising agency Doherty, Clifford, Steers &

Shenfield, Inc., in 1968. The court concluded

that the “advertising agency actually

participated in the deception.”51 Throughout

the 1990s, multiple agencies settled allegations

of misleading advertisements with the FTC.

More recently, in January 2014, Nissan and its

advertising agency TBWA Worldwide, which is

owned by Omnicom Group, settled a false

advertising suit with the FTC. The commercial

features a Nissan Frontier pickup truck driving

up a massive sand dune to help a stuck dune

buggy. However, during filming, both vehicles

were actually dragged up the hill. The FTC

stated: “the Nissan Frontier pickup truck is

incapable of performing the feat depicted in

the Hill Climb advertisement.” The ad did

feature a disclaimer that was displayed for

three seconds at the end of the ad:

“Fictionalization. Do not attempt.” The FTC felt

that the disclaimer did not meet its “clear and

conspicuous” standard for disclaimers. The suit

was unique because the FTC went after both

Nissan and its ad agency, TBWA Worldwide. In

order to charge the ad agency, the FTC has to

determine that it “knew or should have known

that the claims conveyed in the ad were false or

misleading.”52 While this case was ultimately

settled for an undisclosed amount, the case

brought by the FTC against both announcer

and the advertising agency highlights a

potentially significant financial impact in

litigation cost and fines. In addition, publicity

around the case tarnishes the reputation of the

product and the ad agency.

In 2009, the UK government banned an Olay

advertisement for its Definity eye cream, after

deciding the ad unfairly portrayed the benefits

of the product. The advertisement featured

British former model Twiggy appearing

perfectly wrinkle-free. However, upon

investigation it turned out that the images were

retouched. When the government pulled the

ad, it cited “not only a gross misrepresentation

of products, but the ad’s potentially negative

impact on people’s body images.” 53 As a result

of this legal action, Olay’s, and their parent

company Proctor & Gamble’s investment to

create and produce the ad campaign is lost,

and the effectiveness of their product is called

into question. In cases like these, the impact on

ad agencies can be considerable, through

reputational damages related to their ethical

standards and risk to client relationships.

The FTC has been paying close attention to

misleading ads, including native ads. A recent

survey by academics at Berkeley Center for Law

& Technology revealed that over 27 percent of

consumers believed that a native ad was

authored by the website owner, and 29 percent

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did not know who the author was.54 In

September 2014, the FTC announced that it

had sent warning letters to more than 60

companies, including “20 of the 100 largest

advertisers in the country,” regarding their

failure to make adequate disclosures in their

television and print ads. Previously, the

Commission issued guidance on making

effective disclosures in digital ads so as not to

mislead consumers.55

In addition to truthful advertising, the industry

pays close attention to regulations around

advertising certain restricted goods. In their

annual SEC filings, advertising and marketing

companies acknowledge the risks to their

business from changing advertising regulations.

Advertising company WPP states: “There is an

increasing trend towards expansion of specific

rules, prohibitions, media restrictions, labeling

disclosures and warning requirements with

respect to advertising for certain products, such

as over-the-counter drugs and pharmaceuticals,

cigarettes, food and certain alcoholic

beverages, and to certain groups, such as

children.”56

Young children are particularly vulnerable to

the influences of ads. Very young children may

not be able to distinguish between commercials

and program content.57 Ad agencies have to

navigate the myriad of regulations around

advertising to children. A misplaced ad or

product placement can be problematic for their

clients. In addition to regulations for marketing

alcohol and tobacco to under-age consumers,

there are regulations for governing food

advertisements and advertising during

children’s programs. Both advertisers and ad

agencies often participate in self-regulatory

programs governing children’s advertising, like

Children’s Advertising Review Unit (CARU)

program and the Children’s Food and Beverage

Advertising Initiative (CFBAI). Additionally, the

Children’s Online Privacy Protection Act

(COPPA) protects children’s online privacy and

restricts predatory marketing.58

According to the FTC, the largest cigarette

companies spent $8.37 billion in advertising

and promotions in 2011. Due to the various

restrictions on tobacco advertising, over three-

quarters of this was devoted to promotions.59

The Federal Cigarette Labeling and Advertising

Act prohibits all forms of tobacco advertising

on radio and television.60 The World Health

Organization is calling for countries to ban all

forms of tobacco advertising and promotion. In

2012, 83 countries had already reported

introducing a comprehensive ban of all tobacco

products.61 Alcohol marketing is also highly

regulated in many markets. In the U.S., alcohol

companies voluntarily agreed to only advertise

on television programs and websites where at

least 70 percent of the audience is over the age

of 21. The FTC concluded that more than 93

percent of ads were placed in compliance with

these guidelines.62 Voluntary self-regulations

often indicate pre-emptive moves by the

industry to avoid additional regulations. Many

media outlets do not accept advertisements for

firearms. For example, NBC Advertising

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Guidelines state that the company “does not

accept advertisements for firearms, weapons or

fireworks. Advertisements that include firearms,

weapons or fireworks as props may be

approved on a case-by-case basis.”63 The

advertising of pharmaceutical drugs is also

heavily regulated. Only two countries—the U.S.

and New Zealand—allows direct-to-consumer

(DTC) advertising of pharmaceutical drugs that

include product claims.64, 65 Even where DTC

advertising is allowed, there are extensive

guidelines around what must be disclosed and

what is prohibited.66

Ad agencies with significant revenues from

regulated products, like alcohol, tobacco,

firearms, and pharmaceuticals, must manage

risks to their revenue from evolving regulations,

especially where there is a trend towards

stricter restrictions. Interpublic Group reports:

“(l)egislators, agencies and other governmental

units may also continue to initiate proposals to

ban the advertising of specific products, such as

alcohol or tobacco, and to impose taxes on or

deny deductions for advertising, which, if

successful, may hinder our ability to accomplish

our clients’ goals and have an adverse effect on

advertising expenditures and, consequently, on

our revenues.” 67 Ad agencies may also suffer

reputational risk as a result of governmental or

legal action, or from undertaking work that is

challenged by consumer groups.

Value Impact

In their SEC filings, some advertising and

marketing companies state that failure to

comply with FTC regulations around truth in

advertising may result in regulatory scrutiny and

further lead to extraordinary expenses and

increased contingent liabilities. Chronic

instances of presenting false or deceptive

information in advertising could invite

additional government oversight and legal

actions, and have a negative impact on

reputation and lead to long-term deterioration

of intangible assets. This in turn can affect

relationships with key clients and result in a loss

of market share as clients switch to advertising

agencies with stronger ethics.

The amount of legal and regulatory fines and

settlements associated with false, deceptive, or

unfair advertising is a lagging indicator of how

well advertising companies fulfill their shared

responsibility with clients to produce ethical

ads. It also indicates the probability and

magnitude of the direct costs associated with

large penalties, fines, and remediation

activities.

The percentage of campaigns that adhere to

the standards of the ASRC – and the

percentage reviewed – gives an indication of

performance with respect to industry best

practices. It also provides a more forward-

looking indication of how firms are likely to

perform in the future, both in terms of market

share and revenue as well as the impact that

direct and indirect legal costs and reputational

damages may have on brand value and market

share.

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The percentage of campaigns that promote

products or services deemed socially harmful

and subject to restrictions or taxes on use

indicates a firm’s exposure to increased legal

and reputational risks, as well as the risk of

further restrictions on such advertising, which

can have an impact on revenue.

Data Privacy

With the rise of social media, location-based

mobile applications, and the rise of e-

commerce, our digital footprints offer a more

complete picture on consumer habits than ever.

Where companies used to simply place an ad

for a new car on an automobile-related website

or magazine, advertisers can now find highly

detailed information about their buyers’ habits

and lives, and advertising strategies can be

precisely targeted. In addition to targeting

mailers to households or individuals to certain

characteristics, ads can be also be targeted to

specific individuals through online publishers.

Online behavioral advertising includes tracking

a consumer’s online activities over time,

including searches conducted and web content

viewed.68

While new innovations around data use in this

industry can result in higher advertising and

marketing efficiencies, there is also a risk

associated with using consumer data.

Consumers have mixed feelings about whether

personal data adds a higher level of customer

service and satisfaction, or constitutes an

invasion of privacy, particularly when customers

are unaware that their information is being

distributed or sold.

As an industry that uses large quantities of data

on private citizens, advertising and marketing

companies must weigh the benefits of targeted

advertising along with risks of privacy invasion.

Companies in this industry must navigate

increasingly stringent laws and regulations that

govern consumer protection, data protection,

and information security. Legislation on these

issues is still evolving and is heavily scrutinized

by lawmakers and consumers. Breaches of

current regulations, or the creation of new

regulations, could have a material effect on

advertising and marketing companies.69 To stay

ahead of regulations, industry players have

been adopting voluntary self-regulatory

principles regarding targeted ads.

Company performance in this area can be

analyzed internally and externally through the

following direct or indirect performance metrics

(see Appendix III for metrics with their full

detail):

• Discussion of policies and practices

relating to behavioral advertising and

consumer privacy;

• Percentage of online advertising

impressions that are targeted to custom

audiences; and

• Amount of legal and regulatory fines

and settlements associated with

consumer privacy.

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Evidence

Digital marketing has been rapidly gaining

ground. Internet ad spending reached $104

billion globally in 201370 and is expected to

continue growing. The global mobile ads

segment itself may rise to $31.5 billion in 2014

and is expected to triple to $95 billion by

2018.71 Mobile devices provide marketers

unprecedented ability to target ads based on

location, time, and other individual consumer

data.

Recent surveys highlight the mixed consumer

reactions toward use of personal data to target

online ads. According to a March 2014 privacy

study conducted by research firm GfK, nearly

half of the respondents like getting targeted

messages from advertisers. Meanwhile, 64

percent do not trust advertisers and marketers

handling their data. Along those lines, just over

half responded that they would like to see

“marketers and advertisers alter their personal

data policies and activities.” 72 Other surveys

showed even less favorable results. A national

Consumer Report survey found that 85 percent

of online consumers are not willing to share

personal data in order to receive more

personalized advertisements.73 Ad agencies

must balance these consumer concerns with

the increasing interest from advertisers in

targeted ads. A 2010 Network Advertising

Initiative study found that, per ad, behaviorally

targeted ads generated more than twice the

revenue of non-targeted ads.74

Highlighting the link between transparency of

privacy practices and company revenues from

advertising, a study from Carnegie Mellon

University found that subjects were more likely

to purchase from sites where the privacy policy

was clear and transparent. In fact, the study

reveals that online shoppers would even be

willing to pay a premium for goods sold on

sites with stronger privacy policies.75 While this

is not directly related to ads, it stresses the

importance of strong privacy policies for both

ad agencies and the platforms they advertise

on.

A dynamic regulatory environment concerning

consumer privacy, use of personal information,

and online tracking technologies can affect

how some companies in the industry gather

information, and could increase penalties for

data privacy violations. In October 2013, the EU

introduced draft rules for fines of up to €100

million ($137 million) or five percent of annual

global sales (whichever is greater) for data

protection violations under revisions to the EU’s

privacy law. Previously, the maximum fine

imposed on a company by privacy regulators

was only €100,000.76 In the US, the FTC has

proposed self-regulatory principles. Several

privacy bills have been introduced, including

the Commercial Privacy Bill of Rights Act of

2011, the Do-Not-Track Online Act of 2011,

and the Do Not Track Kids Act of 2011.77

Many advertising and marketing companies

have joined voluntary self-regulatory programs,

which were developed to mitigate risks from

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consumer backlash and the changing

regulatory landscape.78 Most major industry

associationsIII participate in the Digital

Advertising Alliance79 and commit to self-

regulatory principles for mobile environments,

multisite data, and online behavioral

advertising. As a result, many online advertisers

offer opt-out programs for consumers.80 Similar

alliances and opt-out programs exist in Canada

and the EU.81, 82

Leading firms in the Advertising & Marketing

industry acknowledge the risk associated with

protecting consumer data. Nine out of the top

ten U.S.-based, publicly listed companies

highlight the issue in the risk section of their

Form 10-K.83 The issue is also acknowledged in

other communications. WPP gives “compliance

with privacy and data protection regulations

and best practices” a materiality rating of

“high” in their 2012-2013 sustainability report.

In light of their business strategy, the company

highlights the need for proper management of

privacy and data protection to expand digital

business. The report claims the issue is

“associated with contractual, financial, legal

and reputation risk” to the company. In

response to the risk, WPP has established

principles governing data privacy and

protection, a tracking system to measure

progress in executing the principles, and

employee training.84

III Associations include 4A’s, American Advertising Federation, Association of National Advertisers, Better Business Bureau,

Value Impact

In their Form 10-K filings, advertising and

marketing companies recognize the risks

associated with data privacy and its material

impacts on business and result of operations.

The changing regulatory landscape in the U.S.

and the EU concerning consumer privacy, the

use of personal information, and online

tracking technologies could affect the efficacy

and profitability of Internet-based and digital

marketing, currently the fastest growing

segment for the industry. Highly targeted

advertising may be viewed as an invasion of

privacy and lead to a loss of consumer

confidence, as well as reputational damage.

Increasing public awareness and regulatory

oversight around the issue may result in limits

on companies’ ability to provide certain

marketing services and products, negatively

affecting revenues and growth prospects. As

the regulatory environment around collection

and use of personal data continues to evolve,

the probability and magnitude of these impacts

are likely to increase in the short to medium

term.

Policies and practices relating to behavioral

advertising and consumer privacy can serve as a

leading indicator of performance, as robust

management systems and alignment with

industry best practice suggest a stronger ability

to manage the sensitive balance between

improving the efficacy of digital advertising

Direct Marketing Association, Interactive Advertising Bureau, and Network Advertising Initiative.

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campaigns and ensuring an adequate level of

customer privacy. This can have a significant

impact on ad agencies’ reputations, and

ultimately on their ability to retain existing

clients and attract new ones.

Companies’ exposure to data privacy risks can

be assessed through the percentage of online

advertising impressions that are targeted to

custom audiences.

The amount of legal and regulatory fines and

settlements associated with consumer privacy is

a lagging indicator of how well advertising

companies have been managing this issue. It

also indicate the probability and magnitude of

the direct costs associated with large penalties

and fines and remediation activities. Lastly, it is

a proxy for the effectiveness of a company's

privacy policies and practices, and it indicates

potential long-term impacts on reputation and

a firm’s ability to attract or retain clients.

HUMAN CAPITAL

Human capital addresses the management of a

company’s human resources (employees and

individual contractors), as a key asset to

delivering long-term value. It includes factors

that affect the productivity of employees, such

as employee engagement, diversity, and

incentives and compensation, as well as the

attraction and retention of employees in highly

competitive or constrained markets for specific

talent, skills, or education. It also addresses the

management of labor relations in industries

that rely on economies of scale and compete

on the price of products and services. Lastly, it

includes the management of the health and

safety of employees and the ability to create a

safety culture for companies that operate in

dangerous working environments.

A company’s ability to attract, develop, and

retain talent indirectly but significantly

influences the results of its operations.

Employing a diverse workforce is particularly

important to advertising and marketing

companies for fostering affinity with and

understanding of the customer.85

Workforce Diversity & Inclusion

Competitive advantage in the Advertising &

Marketing industry is derived from creative,

cutting edge ideas. Companies in this industry

aim to attract top talent to create the most

successful ad campaigns. Additionally, ad

agencies have clients across the globe. In order

to be able to effectively reach audiences,

companies must employ a diverse workforce.

While women represent half of US advertising

employees,86 gender wage gaps remain.87

Additionally, the industry is not as reflective of

the general population in terms of racial

makeup.88 Research has shown that connecting

with target markets relies, to a large extent,

upon employing a diverse workforce that is

reflective of the communities served. As one

Deloitte study explains, “(a) diverse workforce

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serving a broadened customer base is a critical

success factor because, as market research

further demonstrates, a diverse workforce

improves service outcomes and enhances

financial performance.“89

The value of a diverse workforce is particularly

pronounced for advertising and marketing

companies. For example, employee diversity can

help companies gain consumer insights through

better understanding of cultural nuances. When

consumers can identify with a brand, they are

likely to be more loyal. Ad agencies can play a

key role in portraying brands to different

demographics to garner their support.90 In

addition, as with other talent-driven industries,

having a diverse workforce can also help recruit

and retain better employees. In a study on race

and employment in the advertising industry,

authors Marc Bendick, Jr. and Mary Lou Egan

discuss how “differences in access to social

networks” is one of the barriers to hiring

minorities.91

Company performance in this area can be

analyzed internally and externally through the

following direct or indirect performance metrics

(see Appendix III for metrics with their full

detail):

• Percentage of gender and racial/ethnic

group representation for executives,

professionals, and all others.

Evidence

According to the U.S. Bureau of Labor

Statistics, 50.2 percent of full-time employees

in the “advertising and related services”

industry are women.92 Similar percentages are

also reported by top advertising companies;93 in

2012, 52.5 percent of IPG managers were

women,94 as were 47 percent of senior

managers at WPP.95 However, only four out of

the 65 creative and co-creative directors of

commercials during a recent Super Bowl were

female.96 When comparing median weekly

earnings by occupation, BLS reports that female

“marketing and sales managers” earned 67.7

percent of their male counterparts’ earnings.97

The industry has much to be desired in terms of

racial or ethnic diversity. According to the 2010

U.S.US Census, the U.S. population breakdown

is 72 percent white, 13 percent African

American, 5 percent Asian, 0.9 percent

American Indian and Alaska Native, and 0.2

percent Native Hawaiian and Other Pacific

Islander. The balance of the population

reported multiple races or “some other race.”

These statistics add up to more than 40 million

Latinos, 40 million African Americans, and

almost 15 million Asians living in the U.S.98

However, advertising and marketing

professionals do not reflect the same level of

diversity. According to an August 2011 report

from the U.S. Labor Department’s Bureau of

Labor Statistics, 9.6 percent of advertising and

promotion managers were Hispanic, 2.3

percent were Asian, and less than one percent

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were African American. The same study

showed that 5.9 percent of marketing and sales

managers in the U.S. were African American,

5.1 percent were Hispanic, and five percent

were Asian.99 In fact, a 2009 study found that

about 16 percent of large ad companies

employed no African American managers or

professionals.100 While the reasons for these

industry level demographics exist throughout

the U.S. with many factors at play, including

access to education and cultural influence,

companies in this industry must find a way to

source and retain talent from diverse

backgrounds in order to win and successfully

execute client work.

A diverse and inclusive workforce is increasingly

being recognized in Human Resources (HR)

literature as contributing to company value.

Recent research suggests that companies with

effective management of gender diversity,

especially at the leadership levels, outperform

their peers. For example, companies with

sustained high representation of women on

their board of directors outperformed those

with sustained low representation by 46

percent on Return on Equity.101 In a survey of

321 executives from global companies with

annual revenues of more than $500 million, 85

percent of respondents agreed that a diverse

and inclusive workforce provides different

perspectives and ideas that foster innovation.102

Additionally, companies with a diverse

workforce may be able to expand market share.

The then-CEO of Foote, Cone & Belding

(formerly DraftFCB), a subsidiary of Interpublic

Group of Companies, mentioned in a 2010

Wall Street Journal article that “multicultural

advertising” was one of the firm’s fastest

growing segments—with revenue from that

segment doubling between 2008 and 2010.103

Companies in this industry have made

considerable efforts to increase diversity in their

staffs. At the same time, they are focused on

retaining the talented staff they have worked

to attract. Carol Watson, a cross-cultural talent

consultant, said in a recent Advertising Age

article she has noticed increasing numbers of

employee resource groups and affinity groups

at larger marketing agencies. Not only have

some companies, such as WPP, hired in-house

diversity recruiters, but the issue is coming up

at the executive level. WPP’s CEO Rob Norman

said that he allocated more time on diversity

hiring then he expected when he began his role

as CEO in 2010. Interpublic Group’s Senior Vice

President and Chief Diversity and Inclusion

Officer, Heide Gardner, said the group’s

workforce data has shown continued progress,

with “year-over-year improvement for women

and people of color at both the manager and

executive levels.” Interpublic also ties executive

compensation incentives to diversity-hiring

targets.104 As ad firms are trying to recruit more

minority talent, the focus is shifting to retaining

and recruiting talent.105 Attracting talent is part

of creating a diverse workforce, and should be

paired with creating a culture that fosters

employee retention and development.

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The Super Bowl is unique in that viewers pay

almost as much attention to the advertisements

as they do to the action on the field. The Super

Bowl is also an excellent case study of diversity

in advertising because of the imbalance

between the diversity of its viewers and that of

the advertisement’s creative directors. NFL

teams are diverse, their fans are diverse, but

the creative minds behind Super Bowl

commercials are predominately white males.

Nielsen demographics data show that for the

2011 Super Bowl there were 111 million

viewers, 12.5 million of which were African-

American, 10 million Latino, and 51.2 million

female. However, of the 66 advertisements

aired during the game, only eight featured a

person of color in the lead role. That makes up

9 percent of the total commercials, versus 20

percent of viewers who were minorities. Of the

65 creative and co-creative directors that

produced the 2011 event’s commercials, two

were African-American, one was Asian, one

was Latino, and four were women.106

Value Impact

Given the importance of targeting for ad

efficacy, a diverse and inclusive workforce can

help ad agencies to develop campaigns that

reflect the increasing diversity of customers,

both in the U.S. and abroad. This can improve

their ability to attract and retain clients and

increase market share. Moreover, a diverse and

inclusive workforce can have a positive impact

on a company’s reputation and increase its

brand value. On the downside, poorly targeted

campaigns can be perceived as discriminatory

and lead to consumer backlash. In addition,

non-compliance with FCC regulations on equal

employment opportunities could lead to

extraordinary expenses and contingent

liabilities. Combined, these factors can lead to

lower growth projections for revenue and

profits and, ultimately, diminished shareholder

value.

Gender and racial/ethnic group representation

is a proxy for how well ad agency staff is

positioned to serve the broad but diverse set of

consumers targeted by their clients. A

comparative look at the diversity at executive,

professional, and all other levels provides an

indication of how well companies develop and

promote a diverse and inclusive workforce

beyond initial hiring, specifically for creative

positions. Both measures provide an indication

of companies’ absolute and comparative

performance in this area, and the potential

impact of diversity on ad agencies’ reputation

and brand value.

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75 Chegar, Verity. “The Extinction of Online Anonymity,” ESG Matters, Issue 3, Allianz Global Investors. May 2012.

76 Bodoni, Stephanie. “EU Panel Backs Fines up to $137 Million in Privacy Law,” Bloomberg. October 21, 2013. Accessed October 31, 2014. http://www.bloomberg.com/news/2013-10-21/eu-panel-backs-fines-up-to-137-million-in-privacy-law.html.

77 D. Reed Freeman, Julie O'Neill and Nicholas Datlowe, Morrison & Foerster LLP. “Online Behavioral Advertising: Trends and Developments,” Practice Law Company. 2012. p. 6. Accessed October 31, 2014. http://media.mofo.com/files/Uploads/Images/110624-Online-Behavioral-Advertising-PLI.pdf. 78 “NAI Members,” Network Advertising Initiative. Accessed October 31, 2014. http://www.networkadvertising.org/participating-networks. 79 “About the Participating Associations,” Digital Advertising Alliance. Accessed October 31, 2014. http://www.aboutads.info/associations. 80 “The DAA Self-Regulatory Principles,” Digital Advertising Alliance. Accessed October 31, 2014. http://www.aboutads.info/principles/.

81 Digital Advertising Alliance Canada (DAAC), accessed December 11, 2014, http://youradchoices.ca/choices 82 Digital Advertising Alliance EU (eDAA), accessed December 11, 2014, http://www.youronlinechoices.com/.

83 Omnicom, IPG, and Clear Channel Communications, Form 10-K. 2012. 84 WPP. WPP Sustainability Report 2012/2013. 2012-2013. p.90.

85 Alison Kenney Paul, Thom McElroy, and Tonie Leatherberry, “Diversity as an Engine of Innovation,” Deloitte Review. Issue 8. 2011. p. 110.

86 “Table 14. Employed persons, by detailed industry and gender, 2012 annual averages,” US Bureau of Labor Statistics. Women In The Labor Force: A Databook. May 2014. p. 53. Accessed August 20, 2014. http://www.bls.gov/cps/wlf-databook-2013.pdf.

87 “Table 18. Median usual weekly earnings of full-time wage and salary workers by detailed occupation and gender, 2012 annual averages,” US Bureau of Labor Statistics. Women In The Labor Force: A Databook.. May 2014, p. 61. Accessed August 20, 2014. http://www.bls.gov/cps/wlf-databook-2013.pdf. 88 “2010 Census Shows America’s Diversity,” United States Census Bureau. March 24, 2011. Accessed January 14, 2014. http://www.census.gov/newsroom/releases/archives/2010_census/cb11-cn125.html.

89 Alison Kenney Paul, Thom McElroy and Tonie Leatherberry, “Diversity as an Engine of Innovation,” Deloitte Review. Issue 8. 2011. p. 111.

90 Alison Kenney Paul, Thom McElroy, and Tonie Leatherberry, “Diversity as an Engine of Innovation,” Deloitte Review. Issue 8. 2011. p. 108-121.

91 Marc Bendick, Jr., and Mary Lou Egan, “Research Perspectives on Race and Employment in the Advertising Industry,” Bendick and Egan Economic Consultants, Inc. January 2009, p. 55.

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92 “Table 14. Employed persons, by detailed industry and gender, 2012 annual averages,” US Bureau of Labor Statistics. Women In The Labor Force: A Databook. May 2014. p. 53. Accessed August 20, 2014. http://www.bls.gov/cps/wlf-databook-2013.pdf.

93 Data from Bloomberg Professional service, accessed on September 30, 2014 using Equity Screen (EQS) for US-listed companies (including those traded primarily OTC) that generate at least 20 percent of revenue from their Advertising & Marketing segment and for which Advertising & Marketing is a primary SICS industry.

94 “Interpublic group is recognized for leadership in diversity and inclusion,” Interpublic Group. Accessed December 2, 2014. http://www.interpublic.com/diversity/results.

95 WPP. WPP Sustainability Report2012/2013. 2012-2013. p. 5. 96 Lapchick, Richard. “White Men Continue to Dominate Advertising Agencies: A Study of the Super Bowl 2011 Ads,” The Institute for Diversity and Ethics in Sport, July 10, 2011, accessed January 23, 2014. http://www.tidesport.org/MadAve/MadisonAvenue2011_FINAL.pdf. 97 “Table 18. Median usual weekly earnings of full-time wage and salary workers by detailed occupation and gender, 2012 annual averages,” US Bureau of Labor Statistics. Women In The Labor Force: A Databook. May 2014. p. 61. Accessed August 20, 2014. http://www.bls.gov/cps/wlf-databook-2013.pdf.

98 “2010 Census Shows America’s Diversity,” United States Census Bureau. March 24, 2011. Accessed January 14, 2014. http://www.census.gov/newsroom/releases/archives/2010_census/cb11-cn125.html.

99 Vega, Tanzina. “With Diversity Still Lacking, Industry Focuses on Retention.” The New York Times. September 3, 2012. Accessed January 15, 2013. http://www.nytimes.com/2012/09/04/business/media/with-diversity-still-lacking-industry-focuses-on-retention.html?_r=0.

100 Marc Bendick, Jr. and Mary Lou Egan, “Research Perspectives on Race and Employment in the Advertising Industry,” Bendick and Egan Economic Consultants, Inc. January 2009. p. ii.

101 Nancy Carter, and Harvey Wagner, “The Bottom Line: Corporate Performance and Women’s Representation on Boards (2004–2008),” Catalyst. 1 March 2011. Accessed February, 2014. http://www.catalyst.org/knowledge/bottom-line-corporate-performance-and-womens-representation-boards-20042008 102 “Global Diversity and Inclusion. Fostering Innovation Through a Diverse Workforce,” Forbes Insights July 2011, Accessed February, 2014. http://www.forbes.com/forbesinsights/innovation_diversity/

103 Vranica, Suzanne. “Ad Firms Heed Diversity,” Wall Street Journal. November 28, 2010. Accessed November 2, 2014.

104 Bush, Michael. “Sorry State of Diversity in Advertising Is Also a Cultural Problem.” Advertising Age. January 31, 2011. Accessed January 15, 2013. http://adage.com/article/news/lack-diversity-advertising-hiring/148565/ . 105 Vranica, Suzanne. “Ad Firms Heed Diversity,” Wall Street Journal. November 28, 2010. Accessed November 2, 2014. http://online.wsj.com/articles/SB10001424052748704526504575634630194290658. 106 Lapchick, Richard. “White Men Continue to Dominate Advertising Agencies: A Study of the Super Bowl 2011 Ads,” The Institute for Diversity and Ethics in Sport, July 10, 2011, accessed January 23, 2014. http://www.tidesport.org/MadAve/MadisonAvenue2011_FINAL.pdf.

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APPENDIX I: Five Representative Advertising & Marketing CompaniesIV

COMPANY NAME (TICKER SYMBOL)

Omnicom Group Inc. (OMC)

WPP plc (WPPGY)

Interpublic Group of Companies, Inc. (IPG)

Alliance Data Systems Corp. (ADS)

Publicis Groupe (PUB)

IV This list includes five companies representative of the Advertising & Marketing industry and its activities. This includes only companies for which the Advertising & Marketing industry is the primary industry, companies that are U.S.-listed but are not primarily traded Over-the-Counter, and for which at least 20 percent of revenue is generated by activities in this industry, according to the latest information available on Bloomberg Professional Services. Retrieved on September 30, 2014.

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APPENDIX IIA: Evidence For Sustainability Disclosure Topics

Sustainability Disclosure Topics

EVIDENCE OF INTERESTEVIDENCE OF

FINANCIAL IMPACTFORWARD-LOOKING IMPACT

HM (1-100)

IWGsEI

Revenue & Cost

Asset & Liabilities

Cost of Capital

EFIProbability & Magnitude

Exter- nalities

FLI% Priority

Advertising Integrity 63* 100 1 High • • Medium No

Data Privacy 50* 83 2 High • • High • Yes

Workforce Diversity & Inclusion

50* 67 3 Medium • • Medium No

HM: Heat Map, a score out of 100 indicating the relative importance of the topic among SASB’s initial list of 43 generic sustainability issues; asterisks indicate “top issues.” The score is based on the frequency of relevant keywords in documents (i.e., 10-Ks, 20-Fs, shareholder resolutions, legal news, news articles, and corporate sustainability reports) that are available on the Bloomberg terminal for the industry’s publicly-listed companies; issues for which keyword frequency is in the top quartile are “top issues.”

IWGs: SASB Industry Working Groups

%: The percentage of IWG participants that found the disclosure topic to likely constitute material information for companies in the industry. (-) denotes that the issue was added after the IWG was convened.

Priority: Average ranking of the issue in terms of importance. One denotes the most important issue. (-) denotes that the issue was added after the IWG was convened.

EI: Evidence of Interest, a subjective assessment based on quantitative and qualitative findings.

EFI: Evidence of Financial Impact, a subjective assessment based on quantitative and qualitative findings.

FLI: Forward Looking Impact, a subjective assessment on the presence of a material forward-looking impact.

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APPENDIX IIB: Evidence Of Financial Impact For Sustainability Disclosure Topics

Evidence of Financial Impact

REVENUE & EXPENSES ASSETS & LIABILITIES RISK PROFILE

Revenue Operating Expenses Non-operating Expenses Assets Liabilities

Cost of Capital

Industry Divestment

RiskMarket Share New Markets Pricing Power

Cost of Revenue

R&D CapExExtra-

ordinary Expenses

Tangible Assets

Intangible Assets

Contingent Liabilities & Provisions

Pension & Other

Liabilities

Advertising Integrity • •

•

•

Data Privacy • • • •

Workforce Diversity & Inclusion • • • • •

H IGH IMPACTMEDIUM IMPACT

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APPENDIX III: Sustainability Accounting Metrics | Advertising & Marketing

TOPIC ACCOUNTING METRIC CATEGORYUNIT OF MEASURE

CODE

Advertising Integrity

Amount of legal and regulatory fines and settlements associated with false, deceptive, or unfair advertising*

Quantitative U.S. Dollars ($) SV0301-01

Percentage of campaigns reviewed for adherence with the Advertising Self-Regulatory Council’s (ASRC) standard, percentage of those in compliance

Quantitative Percentage (%) by revenue

SV0301-02

Percentage of campaigns that promote products or services deemed socially harmful and subject to restrictions or taxes on use

Quantitative Percentage (%) by revenue

SV0301-03

Data Privacy

Discussion of policies and practices relating to behavioral advertising and consumer privacy

Discussion and Analysis

n/a SV0301-04

Percentage of online advertising impressions that are targeted to custom audiences

Quantitative Percentage (%) by revenue

SV0301-05

Amount of legal and regulatory fines and settlements associated with consumer privacy**

U.S. Dollars ($) n/a SV0301-06

Workforce Diversity & Inclusion

Percentage of gender and racial/ethnic group representation for: (1) executives, (2) professionals, and (3) all others

Quantitative Percentage (%) SV0301-07

*Note to SV0301-01: Disclosure shall include a description of fines and settlements and corrective actions implemented in response to events.

**Note to SV0301-06: Disclosure shall include a description of fines and settlements and corrective actions implemented in response to events.

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Advertising & Marketing

Advertising Integrity

Data Privacy

Workforce Diversity & Inclusion

APPENDIX IV: Analysis of SEC Disclosures | Advertising & Marketing

The following graph demonstrates an aggregate assessment of how representative U.S.-listed Advertising & Marketing companies are currently reporting on sustainability topics in their SEC annual filings.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

TYPE OF DISCLOSURE ON MATERIAL SUSTAINABILITY TOPICS

NO DISCLOSURE BOILERPLATE INDUSTRY-SPECIF IC METRICS

100%

83%

67%

IWG Feedback*

*Percentage of IWG participants that agreed topic was likely to constitute material information for companies in the industry.

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