AdOutlet.com has moved in excess of $20 million since going live on the Web last June, he says.
FOCUS ON UNSOLD INVENTORY
"Media [operations], particularly radio, TV and cable, all have inventory that goes unsold because buyers who may need it have no way of knowing it exists," says Jeff Trumper, president-CEO, broadcastspots.com, which launched Jan. 4.
"There are still literally billions of potential media dollars lost every year because buyers can't hook up with sellers," says Mr. Trumper. He quotes Veronis, Suhler & Associates data that forecasts an $85 billion radio, TV and cable selling segment by 2002 as proof there is still a lot of money to be made selling space via the Internet.
"Within three years, 15% of all advertising inventory will be sold this way," says Jim Nail, senior analyst at Forrester Research.
"Without a doubt, these sites are going to increase the amount of money going into media," says Mike Jackson, president-CEO, BuyMedia.com, which opened as a traditional media transaction company in 1995 but unveiled its Web site in January 1999. Now a Web-only company, BuyMedia doesn't actually sell advertising online but uses existing media buying software to make the buying process easier.
BuyMedia.com claims it is processing $1 million to $2 million weekly in radio advertising and expects to do $200 million in billings for all media in 2000.
Radio has enjoyed one of its best years in 1999, with national spot sales up 19% to $3.2 billion due to heavy spending by dot-com advertisers, according to Radio Advertising Bureau.
RADIO LIKES SYSTEM
RAB believes Web sites will only continue to help stations sell more radio time this year.
"Frankly, these [buyer] sites are a wonderful use of the Internet," says Marissa Gluck, an analyst with Jupiter Communications. "They're wonderful in terms of offering opportunistic media buys, and they certainly open up media for many advertisers who may want, for instance, to be associated with a sporting event but haven't gotten in before."
Yet media buyers and planners of agencies are withholding judgment on the viability of these online media marketplaces.
For one, media executives say, there's no sense that one can strike a major deal on behalf of an advertiser by shopping the online sites.
"They're all in the early stages," says Rishad Tobaccowala, president of Starcom IP, the Chicago-based Internet unit of Leo Burnett's Starcom media division. "I think they're likely to appeal to two particular segments of the media market. [First] is people trying to get rid of inventory, and second, agencies that want to take advantage of an opportunistic buy."
"We haven't bought anything yet online," says Donna Mercer, VP-media director, Howard, Merrell & Partners, Raleigh, N.C. "We've certainly visited all the sites, and they are interesting, but we see them as more opportunistic, that is, perhaps to get a sense of how a particular media market is shaking out."
Each site offers a slightly different media inventory, a point of difference that site executives hope to drive home to media executives this year with a stream of targeted marketing efforts, including print ads in media trade press, online banners and e-mail to media executives who register on the sites.
The compelling reason for registering, site executives say, is so buyers can take advantage of inventory that comes open at the last minute.
"We know that buyers aren't going to be on our site 24/7," says Mr. Masarek. "But we're offering a perishable commodity: Media. The more we can alert buyers who operate in a competitive, difficult environment a way to grab that buy at the click of a mouse, then everyone involved comes out ahead."
Mr. Masarek claims AdOutlet
.com has 6,200 registered media buyers. AdOutlet.com uses an inventory replenishment system that allows the company to limit the amount of inventory that it places on the site at any given time. As that inventory is sold, new inventory is put up at a rate of a page or two at a time. Buyers send in their bids and are notified if they have "won" that buy. Some of the buys have minimum bids, some others are open, Mr. Masarek says.
"Companies like this are an opportunity for us to pick up new revenue streams from places we never would otherwise get advertising," says Raymond Johns, president-CEO, Catamount Broadcast Group, which owns TV stations in such small markets as Fargo, N.D., and Twin Falls, Idaho.
While his broadcast group ended 1999 with $17 million in ad revenue, a small percentage of which came from online media sales, Mr. Johns says that $100,000 "is a reasonable goal" for 2000. "That's $100,000 in new ad dollars," he says.
AdAuction.com, which began by offering outdoor media, has branched into print and, soon, both radio and TV broadcast.
ONE BUY NOT ENOUGH
AdAuction.com strives for exclusivity agreements with suppliers, but "We're flexible about it," says Diane Chamberlain, VP-marketing at AdAuction.com. "The goal all along is to provide a one-stop marketplace for media because we realize that one media buy is not sufficient for an entire campaign."
AdAuction.com, which made a big splash last year by auctioning off an outdoor board on U.S. Hwy. 101 outside San Francisco for about $55,000 (when the media company had been receiving about $25,000 per contract on that board), has about 5,600 registered media buyers on its site.
Recognizing that there's a significant human element in the buying and selling of media, Adsmart.net CEO John Federman says sales forces will continue to be an important part of the process.
"We have about 65 salespeople now, and we continue to add people quickly because it's important to call on the media buyers at agencies and the advertisers themselves," says Mr. Federman.
"Salespeople play an important consultative role in the process, and there's great demand for that in-person representation to get the most out of a media buy," he says.
Large media concerns, Mr. Tobaccowala says, may opt to open their own Web marketplaces instead of using these online sellers.
"There still are so many layers to be explored," he says. "I don't see these Web sites as replacing the buying and selling process, at least not in the short-term."
"These online auctions won't displace the prominence of the buyer and seller relationship," agrees Ms. Gluck. "But there's no question that they are going to grow and become significant factors in the buying and selling of all media."