Wal-Mart Backs Online Auction for TV Ad Dollars

Retail Giant and Other Marketers Look to Build $50 Million Test System

By Published on .

Most Popular
NAPLES, Fla. (AdAge.com) -- A group of marketers led by Wal-Mart's Julie Roehm today put out the call for advertisers to contribute $50 million for a test of an online auction system to buy and sell TV advertising.
Julie Roehm, senior VP-marketing communications, is asking advertisers to kick in $50 million to support a test online system to buy and sell TV ads.
Julie Roehm, senior VP-marketing communications, is asking advertisers to kick in $50 million to support a test online system to buy and sell TV ads.

The initiative is being championed by an ad-hoc group of 10 marketers including Wal-Mart, Hewlett-Packard Co., Masterfoods, Microsoft Corp., Philips and Toyota Motor Sales USA's Lexus.

"We can be the driver of change" to bring more transparency and efficiency to media buying, said Ms. Roehm, senior VP-marketing communications at Wal-Mart Stores USA.

The big idea
The proposal is a more contained version of a big idea that Ms. Roehm has been pushing for nearly two years. In a June 2004 Viewpoint essay in Ad Age, Ms. Roehm -- then a marketing executive at DaimlerChrysler's Chrysler Group -- proposed replacing the TV upfront market with a Nasdaq-like online trading system for commercials. She expanded on that idea at an Association of National Advertisers forum in March 2005. Ms. Roehm joined Wal-Mart in January.

At the ANA's Advertising Financial Management Conference here today, Ms. Roehm and others took the stage to propose specific action by calling on advertisers to:

  • Contribute $50 million to a pool to buy media in a test of an Internet-based media exchange.
  • Create a steering committee, working through the ANA, to choose what technology, auction forms and media types to use in the test.
The ANA, through Exec VP Bill Duggan, is facilitating the marketers' initiative.

'Time for a change'
Ann Bybee, corporate manager-advertising, brand and product strategy at Lexus USA, noted that the upfront market -- the frenzied annual ritual of buying and selling TV time -- dates back 40 years. "It's time for a change," she said. "The system isn't transparent." Ms. Bybee said the hope is to have a test up and running as early as the first quarter.

At the ANA conference today, eBay presented an online trading platform that could be used. The "Media Marketplace" home page would allow an advertiser or agency to click on a desired network, age, gender and time; see the available inventory; see the time remaining in the auction; and then enter a bid. If successful, the buyer soon would get the message: "Congratulations! You are the Winning Bidder!"

The system could work in two ways: A forward auction, where buyers bid for available inventory; a reverse auction, where media sellers responded to a buyer's request for proposals for, say, 20 gross rating points for men age 18-34.

Taking a small slice
Under eBay's scheme, the trading system would be owned and controlled by the ad market; eBay would likely take a small slice of transactions as a fee. Media would decide how much of their inventory to offer on the system.

Ms. Roehm said the steering committee could choose another tech partner, though she added eBay's offering "is a really good solution."

Lou Schultz, chairman of consultancy LMS-Unlimited and a veteran media agency executive, has been working with the ANA on the initiative. He said the steering committee would need to decide what type of media to include in the test and have discussions with media on how the system would work.

The test most likely would include a narrow slice of TV -- some cable, digital extensions of TV (digital channels, online, wireless), possibly scatter -- rather than trying to tackle the upfront. (Upfront refers to TV time bought in the spring before the fall TV season; scatter is time bought during the season.)

Limited risk
Mr. Schultz said a small portion of the $50 million pool -- maybe $1 million -- would be used to build and staff the online exchange. Participants could spend the rest of the money to buy media on the system. Since the money would come out of marketers' existing media budgets, Ms. Bybee said, there would be limited risk for marketers.

Steve Grubbs, CEO of Omnicom Group's PHD North America (Chrysler's media buyer) and a proponent of an online exchange, said the system over time could be used for a variety of media beyond TV.

But Mr. Grubbs acknowledged that marketers have mixed opinions about the proposed scheme. Top advertisers -- "P&Gs, Pfizers" -- are "already paying bottom dollar" by using their clout in the existing system, he noted.

Networks not on hand
Noticeably absent from the ANA's panel discussion on the topic were executives from TV networks. "I don't think they're really going to endorse this," said Mr. Grubbs. Big networks, accustomed to the upfront, "will look at this as a loss of control."

But some media sellers could be won over, Mr. Grubbs said, with an incentive: a pool of $50 million waiting to be spent.

Proponents now are looking to line up advertisers to participate in the test. Mr. Schultz said "it's a good assumption" that Wal-Mart and the other nine initial backers will contribute. Said Ms. Roehm: "We'll be the biggest cheerleaders."

Ms. Roehm said Wal-Mart hasn't officially committed to contribute; Ms. Bybee said Lexus will participate. But the bigger issue, Ms. Roehm said, is to get a mass of advertisers to make small contributions for the test. "A hundred advertisers would be great," she said. "Maybe it's 200."
In this article: