Going Once, Going Twice ... You Win the Account

Online Auctions Start to Take Hold With Media Companies

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NEW YORK (AdAge.com) -- Earlier this week, a half dozen agency execs were huddled around a conference table in the Midtown Manhattan offices of Earthquake Media. CEO Robert Davidman was manning a laptop, which linked to a 42-inch plasma-TV screen mounted on the wall.
Enversa is one of a number of auction-based media-buying and -selling systems that have cropped up recently.
Enversa is one of a number of auction-based media-buying and -selling systems that have cropped up recently.

"Do I hear 150,500?" he types on his keyboard, initiating Enversa's first offline media auction. Bidder three quickly upped the ante to 151,000. Then bidder five came in at 151,500. Soon after bidder three re-upped to 152,000.

Princeton Review
The medium? Out-of-home. The Princeton Review, one of Earthquake's clients, needs at least 150,000 posters printed and distributed on select college campuses to promote its GRE, MCAT and MSAT study courses. The bidders were competing to be the winner of Princeton Review's mid five-figure budget, and their bids represented the number of posters they were willing to print and post based on that budget.

Enversa is one of a number of auction-based media-buying and -selling systems that have cropped up in the past couple years. Others include Bid4Spots, which auctions off remnant radio inventory, Google-owned dMarc, whose auction-based system is in a trial with XM Radio, and Scatter.TV, which sells remnant TV time. And several major marketers, including Wal-Mart, are working toward a way to set up an auction system for TV buying and selling. Media buying auctions, it seems, are an idea that is not going away any time soon.

Enversa, said CEO Doug Levy, is meant to help advertisers get more for their buck and reduce the amount of time it takes an agency and vendor to strike a deal. "It would be a disservice to create a system that reduces the importance of agencies," he said. "Enversa is focused on the negotiation."

Like an online chat
It's a reverse auction set up in what is essentially an online chat format. The marketer offers up a set budget and then vendors bid against each other for how many ratings points, posters or impressions they can offer to win that budget. All of Enversa's auctions until now have been in the online media realm.

Also at Earthquake's offices for the auction was Marie Santiago, who heads business development for the company and has been busy meeting with media agencies and clients to explain how Enversa's software works. Her biggest challenge is getting more traditionally minded media sellers on board.

Before the auction begins, a discussion between Ms. Santiago and Andrew Ettinger, an associate media director, ensues over why a vendor -- especially a broadcast network -- would agree to such an auction.

"Because there's money at the end of the day -- they're there to win a budget," she said. A pair of print media auctions are in the works ("Print's already off rate card," she said, explaining that it's perfectly suited for a reverse auction), as is one broadcast auction. And "nine out of 10 agencies want to be the first to do a broadcast auction," she noted.

But Mr. Ettinger points out marketers are trying to move away from spots and dots. Plus, the way TV is bought and sold now, he said, networks just sell the less desirable "rotator stuff" packaged with the positions everyone really wants.

Enticing the bids
During the auction, Ms. Santiago coaches Mr. Davidman: "OK, now let the bidders work it out. ... Go ahead and entice, say, 'Do I hear 155,000?'

A minute later as bidding appears to be winding down, as Mr. Davidman begins to type "154,400 ... going once ... going twice." But before he can hit enter, bidder four comes in at 155,000.

Cheers erupt.

"In an auction, people know it's smart to wait right until the end," Ms. Santiago said. "EBay has trained a generation of people."

Bidding on the out-of-home project were Hadley Media a 13-year-old events and experiential marketing company; Alloy Media and Marketing, a youth-targeted firm; OnCampus Media; and Steel Media, which also specializes in college-targeted campaigns.

The bidding came down to Alloy and Steel.

Steel emerged victorious.

Elise Carlson, account manager for Steel, said she was interested in The Princeton Review business, and when Earthquake suggested she participate in the auction, she figured it couldn't hurt.

She said she had done homework and calculated exactly how high she could bid to make it worth her while. And in terms of shortening the negotiation process, it worked, she said.

'This was convenient'
"Usually it takes me a month to two months to win new business -- building lists, putting proposals together," she said. "This was convenient. Earthquake had the RFP [request for proposals], they said here's what it is, here's the flat rate, we're not playing around with the budget. It moved things along and instead of wasting time bartering and going back and forth we can put our energy toward the campaign."

"Can't hurt" seemed to be the mantra of several of the vendors that participated.

Patrick Hadley, CEO of Hadley Media, which had executed Princeton's poster project over the past two years, said as the incumbent he wasn't "all that thrilled" to bid against others for the business, but he added he's a big fan of Earthquake Media and the fact they were trying something different.

"Conceptually it's an interesting idea and the [buying system] needs more transparency," Mr. Hadley said. "But the bottom line is what we do is not a commodity. Hopefully we offer intangibles to our clients that you can't put on paper or a screen. Intangibles like answering the phone whenever they call, going one step beyond in terms of what we'll offer." Still, he plans to participate in Earthquake's next Enversa auction later this month for online client Answers.com.
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