Wired for business Stations using or evaluating AdValue Network, and their network affiliations. ESCAPE FROM WASTE SELLERS HATE TO YIELD FACE- TO FACE FACET OF DEAL, BUT THERE ARE DOLLARS TO SAVE

By Published on .

Two new computer systems could bring spot TV sales into the electronic future from its paper wasteland.

These systems won't replace the process of negotiating or planning ad-time sales, but they should help stations reduce paperwork errors and receivables, and better handle last-minute sales.

"We hope to achieve a basically paperless communications process between the station and the agency," says Ray Heacox, director of sales at KNBC-TV, Los Angeles.

Technology advocates have wanted to wire TV stations and their reps directly to ad agency media buyers for years. Though there have been technical obstacles in the past, there's also been institutional resistance to change.

Ad sellers don't want to lose face- to face dialog with their customers. Reps fear being knocked out of the loop by a direct electronic link between stations and ad agencies. And all parties have resisted being forced to use a proprietary system designed by a potential competitor.

Still, supporters say, the efficiencies of these systems are too grand to ignore.

According to a study by Group W, the TV station group of Westinghouse Broadcasting Co., about 70% of the invoices that pass between the stations and the agency have some discrepancy in them.

"This is annoying and time consuming," says Dave Graves, president of AdValue Media Technologies, which markets its AdValue Network system linking buyers and sellers.

He estimates 40% of the revenue lost to errors could be eliminated by a third-party system that handles transaction tracking.

AdValue Media Technologies, owned by Group W, Reuters and software maker Safeguard Scientifics, has 10 stations and their reps either using or evaluating a test of the system (see chart on Page S-28).

Mr. Graves says the system's major savings are in sales credits-the 1% to 3% of inventory a station can't bill because of an error or a dispute.

In those situations, the station generally writes off the time. But with a computerized system, Mr. Graves claims, "You never run a spot you don't get paid for."

Using the system also speeds up the payment of receivables, which now averages more than 70 days.

"In most industries, that would get your comptroller fired," says Mr. Graves, who claims AdValue can bring stations a 10-day improvement in speed.

The system helps marketers that require last-minute buys, such as movie studios, he says.

Early results from the field generally have been positive, if only because agencies with the system are using it frequently.

"It's difficult to say [AdValue Network] has made a substantial difference right now, but some of our agencies use it exclusively and we feel the impact could be quite profound," says Lisa Churchville, director of sales at WMAQ-TV.

Ms. Churchville estimates that about 5% to 7% of the station's total billings come in on AdValue.

Greg Schaefer, VP-general sales manager for Group W Television, the sales arm for Group W stations, says receivables have come in faster from the agencies exclusively using AdValue Network.

Also, he says, Group W is processing a lot less paperwork because the system provides instant reconciliation of all affidavits.

"If the president spoke last night and the late [local] news ran late, you can immediately tell the buyer and get agreement" on changes, he says.

Also ready for agency/station testing is Direct Agency Rep Exchange system, a joint venture of Donovan Data Systems, one of the largest data processors for ad agencies, and Jefferson-Pilot Data Services, which provides automation needs to major rep organizations.

"The joint venture was an outgrowth off all the reps meeting over two years or more and assessing what options might be available for linkage," says Tom Olson, president of rep Katz Television Group.

Since reps helped design the Dare system, which should be ready as early as next month, it should be no surprise that they're firmly in its electronic loop.

Local agencies will be able to use the system to place spots on local stations. But out-of-town agencies won't be able to contact stations directly through Dare.

Orders will be routed electronically to the rep, who will approve it before sending it to the station's traffic system.

"Reps realize direct business has occurred," Mr. Olson says. "We don't want to make it any easier" for marketers who want their agencies to buy directly from out-of-town stations.

Like the AdValue Network, Dare isn't designed to automate the actual sales process. Reps and media buyers will still go one-on-one to design packages of spots and negotiate pricing. The back office paperwork is the target.

"What we want to do is clean up the agency morass," Mr. Olson says.

Oddly, Katz has its own electronic data system, which links it to stations and major ad agencies D'Arcy Masius Benton & Bowles, McCann-Erickson Worldwide and Foote, Cone & Belding Communications, all in New York, and Leo Burnett USA, Chicago. The system was designed as a test of electronic data transfer, and Mr. Olson says it will remain in place as long as the rep and the agencies want to use it.

For stations, the main technology difference between Dare and AdValue is that in the latter system, all transactions must go through a central computer. Dare, meanwhile, will work through existing Donovan and Jefferson-Pilot equipment.

Mr. Olson says he didn't want the two systems to be adversarial at this point.

"There are a lot of people who want the end result. There are a variety of technological approaches and we want what's going to be the best," he says.

Despite having seen sales technology promises go unfulfilled, station sales managers are looking forward to incorporating these innovations into their sales procedures.

"I think the need on the part of this business to automate is enough to make it happen," Mr. Heacox says.

But some things must still be done the old-fashioned way, he says.

"I'm a firm believer that the selling process will never fundamentally change," he notes. "It's two people talking about what the best deal for the customer and the station is."

Kathleen Keefe, general sales manager at WFSB-TV, says an electronic system like AdValue wouldn't lead to the demise of reps.

"There's no reason to want to eliminate the rep. They still have efficiencies of supply and demand," she says.

Ms. Keefe acknowledges the resistance to going electronic. But she says WFSB-TV is participating in the test because "we'll be with it that much sooner and we'll have input on how it works."

In this article:
Most Popular