Wal-Mart Stores, Lexus, Hewlett-Packard and Microsoft, among others, have already drafted eBay to set up a test TV exchange and are soliciting support at an informational website at admarketpilot.com. The system, named eMedia Exchange, is scheduled to go live in early 2007 and could revolutionize the $70 billion TV advertising business. As yet, the website carries little more than a call for registration but interestingly asks for details of other media that marketers might want to buy online beyond TV.
Not a replacement to the upfront
Ann Bybee, corporate manager of advertising, brand and product strategy at Lexus, issued an open call to marketers last night to join the initiative, which is supported by both the Association of National Advertisers and the American Association of Advertising Agencies. "This is a formal call to encourage all advertisers to participate in the online exchange," said Ms. Bybee, adding, "This area hasn't seen change in 20 to 30 years." Ms. Bybee said the online trading system was not intended to replace the upfront, but it could be useful in replacing scatter buys.
The cross-industry task force has moved with speed to partner with online auction system eBay, which will manage the framework of the technology but may not end up executing the project long term. Already lined up to pour in excess of $50 million, in total, into the media-buying test are: Wal-Mart, H-P, Microsoft, Brown-Forman, Philips Electronics and a handful of others. Ms. Bybee felt confident that others would join once they learned more details of the plan.
The experiment needs a media partner to make it viable, and Ms. Bybee hinted that national cable channels have been talking to the group. Discovery Networks Ad Sales President Joe Abruzzese is on the advisory board, and syndicators are also being considered partners.
Why would media vendors be involved in the program? It's simple, said Sean Cunningham, president-CEO of the Cabletelevision Advertising Bureau. "U.S. advertisers spend almost $70 billion on TV and when a group of them want us to try to test something as an alternative, we have to listen," he said. "And 'we' means the programmers and the agencies that do the buying and specifying and stewarding."
He noted that cable has put a lot of time, money and effort into developing e-business applications in order to handle the tens of thousands of units that a marketer may use to advertise a single product over a six-month period. That electronic stewardship is helping cable execs be more objective when trying alternatives.
"We've always known that we have a collective electronic future," he said. Still, "there are an awful lot of bridges to be crossed for this to be truly beneficial to every one involved."
There has been no word on the broadcast networks, which to date have largely pooh-poohed the idea.
The marketer group -- also supported by media agencies including Zenith Media, Magna Global, PHD and Carat -- is set to reveal details of its steering committee next week.
The test would work as a reverse auction in which media sellers would bid on specs issued by the companies involved. The system would be funded from charges made to participants on both the buy and sell side.
A reverse-auction model tends to create more value for advertisers. But Dave Newmark, CEO of Bid4Spots, which runs an automated reverse-auction radio buying service, warned that it would be difficult to make deals too far in advance. While media buying is based on supply and demand, another function in that relationship is time.
"The broadcasters have more leverage the further out the transaction occurs," said Mr. Newmark, whose company sells last-minute spots. Advertisers typically get a good value in such deals because the stations understand they wouldn't be able to sell that open inventory anyway. "Where the transaction happens in the timeline matters deeply."
But Doug Levy, CEO of Enversa, which supplies reverse-auction media buying software, said that aside from the timing issue, an automated system can cut down on the man power normally used to buy media. He recently presented his system to the ANA in Chicago and has met with Wal-Mart Senior VP-Marketing Communications Julie Roehm to discuss her plans with eMedia Exchange. Ms. Roehm, tied up with Wal-Mart's agency review, is choosing to let others do the talking on this project.
The industry task force must battle stiff resistance to its idea from entrenched parties. Media agencies, for example, might feel this is an exercise at cutting them out of the picture, while TV executives claim that an electronic system would commoditize their business.
Ms. Bybee responded to critics by saying it would increase transparency in media-buying costs. "All I know is what I paid last year; I'd like to know if I paid fair market price," she said, reflecting the concerns of numerous marketers.
The next meeting, to be hosted by eBay in San Jose, Calif., is planned for early September and will be aimed at explaining the idea to interested parties on all sides of the fence. "This would lend itself to anything that's not negotiated in the upfront," she added.