Pairing marketing buyers, providers

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The buying and selling of marketing services is a courtly and inefficient affair. Big accounts are usually awarded only after a series of earnest phone calls, fancy lunches and elaborate pitch meetings. A new exchange intends to change all that by bringing the whole process to the Web.

U.S. has introduced an exchange intended to match up the corporate execs that buy marketing services and the agencies that provide them. It is aimed at corporate advertisers of all sizes and the 165,000 marketing agencies throughout the U.S., including ad agencies, direct marketing and public relations firms, stock photography concerns and trade show companies.

A brand manager from a software company, for example, can log on, submit a request for proposal for an ad campaign and shoot it out over U.S.'s exchange. Interested marketers can then contact the advertiser.

Offline, this process can be excruciating for both advertiser and marketer, said U.S. CEO and founder Martin Williams. The exchange can shorten the ordeal to hours, he said.

The company currently has the niche to itself. Similar exchanges, such as and, link advertisers with Web sites.

Outlook uncertain

Were its intended market ripe for a transition to the Web, U.S. would be set. But at least one consultant said that it is not. Many corporate advertisers value things that are hard to measure over the Web- such as personality and compatibility-more than timeliness and quality of work in selecting an agency, said Jim Nail, senior analyst at Forrester Research Inc.

"Hiring an agency to do work is not a commodity. It's not always done on the quality of the work. It's not always done on price,'' Nail said. "What's more important is measuring the people I'm going to have to deal with day in and day out for months.''

Williams is sanguine that there is a big, untapped marketplace for his company's exchange. "It's perfect for an exchange. There's massive fragmentation,'' he said.

Before founding U.S., Williams held top marketing jobs with companies such as Glaxo Wellcome plc and American Home Products. Among his responsibilities was choosing marketing agencies, a task he said was agonizing and time-wasting.

"It's a pain to do this effectively,'' said Williams, a Wales native and Harvard Business School grad. "There's a constant churn of ad and public relations agencies.''

Apparently, other execs agree. Since launching earlier this month, nearly 2,000 users have signed on, including Commerce One Inc. subsidiary AppNet Inc. and nCipher, a Web security company. U.S. intends to sign up 20,000 users by year-end, he said.

The exchange's use is straightforward. Advertising execs log on to it and select, for example, direct marketing. They would then fill out an RFP, describing the assignment and its estimated budget. U.S. would automatically forward it to direct marketing agencies with profiles that match the assignments. Agencies then contact the advertiser online for simple assignments, such as stock photography, or call them for more involved ones, such as creative work.

U.S. makes money by charging agencies commission rates. These range from 2% for easy jobs such as printing to 50% for more complex ones, including application services provider services. So far, the company has made about $200,000, Williams said.

Given that U.S. has attracted only $1 million in venture capital, and considering the failure of many start-ups to make any money, that amount is notable. In the meantime, the company is seeking another cash infusion and setting marketing plans, including magazine ads and trade shows.

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