EDI, which uses electronic invoices transmitted over the Internet, is finally starting to cut the back-office costs of buying cable, TV and radio ads.
In the past, media sellers resisted automation because they feared it would eliminate the ad-buying negotiation process, says Mike Jackson, president of Buymedia, San Francisco, which sells traffic and billing systems to media outlets.
But the same software vendors that sellers trust to automate back-office functions without impacting pricing flexibility have now introduced support for EDI as part of their offerings.
One of the biggest obstacles to implementing EDI into traditional media-buying services has been integrating the automatic-transaction systems into buyers' and sellers' existing databases and technology infrastructures.
Previously, ad-insertion orders, traffic requests, affidavits showing the ads have run and invoices had to be entered by hand into various systems. Now, they can all be sent electronically via the Internet without retyping. The rate of automation, and the pace of change, varies in radio, TV and cable, but progress has been rapid in all areas.
"The framework is all set up so no one has to touch a piece of paper," says Harvey Kent, exec VP for Donovan Data Systems, New York, which produces back-office software systems for media sellers. In addition, a pattern for evolving the industry's technology has been set. "You get the industry to agree on the transaction set, get the vendors to produce the transaction and read [the transaction record] electronically," Mr. Kent says. Then, "the Internet provides an easy vehicle and electronic invoicing."
Each medium has its own story to tell. In TV, Donovan and another company, Encoda Systems, have brought more than 600 stations online.
In radio, the merger of rep firm Katz Media into a company later acquired by station owner Clear Channel Communications has resulted in a common buying and traffic system used by nearly one-third of the industry.
In cable, the Cabletelevision Advertising Bureau, working with PricewaterhouseCoopers as a consultant, now has 65 networks and 50 agencies trading contracts and invoices electronically. And National Cable Communications, a spot cable rep firm, provides services including electronic invoicing and an interface to the Donovan system.
The key to making all this work is standard "middleware" software sitting between the billing and management systems of buyers and sellers, says Caroline Oberg, CEO of ODAC, Boston, now part of Encoda Systems.
Rather than bypassing legacy systems, Ms. Oberg says, "We're focused on improving and facilitating the process."
It's an approach that has achieved success. Buyers can implement EDI within the software they already use, actually saving money over sending it by mail.
Don Wahlig, director of marketing for eBusiness Services at Interep in New York, a major radio rep firm, explains how all this will work in radio. "The reason for rekeying [data] is systems don't talk with one another-they're not integrated. So we're forming partnerships with industry software providers. We're creating a keyless process by which information submissions are transferred using RadioExchange as the hub of the wheel."
As a result Mr. Wahlig says, "There's no software for the agency to buy, and upgrades are fast and cheap." When RadioExchange upgrades its software, everyone using the system gets instant access to the improvements. All this will have a direct impact on profit margins, says Jerry Boehme, senior VP-strategy planning of Katz Media Group.
Each time details of a transaction are typed into a computer, mistakes are made, he says. Transferring the files electronically eliminates those mistakes, enabling people to move on to higher-value activities.
Pete Stassi, senior VP and director of local broadcast at Omnicom Group's BBDO Worldwide in New York, says the ability to integrate with Donovan was an important consideration for him in helping to create a framework for an industry-wide EDI system as part of his work with the American Association of Advertising Agencies' EDI task force.
Despite impressive real gains, however, there's more to do, and more productivity to be gained, in all these industries.
Not all stations and networks are online, and systems can be made more compatible with common tagging of form fields under eXtended Mark-up Language (XML), a successor technology to the Web's HTML that lets users define their own tags and forms. Industry groups will play a big role in making agreements on XML standards happen, says Donovan's Mr. Kent. "We're speaking to [4A's], the Cabletelevision Advertising Bureau, all these groups and urging them to take a leadership position in this effort," he says. For instance, the CAB is now working to create unique identifiers for each available commercial opportunity, says president and CEO Joe Ostrow. Once that happens "the bookends can deal with changes and commercial scheduling using EDI. Right now we have something like 22 networks that can serialize," he says.
There is a downside to all this, however. "It does kind of commoditize the industry, but things are moving too fast," says Mr. Stassi. But in the end, the whole industry will benefit, he added. "We need to move electronically. The buyers are more sophisticated anyway-they're in and out of the computer in a heartbeat. And you have to take advantage of those trends.