LONDON (AdAge.com) -- Automated media-trading is not a new idea. But getting a system that media sellers and buyers can agree to for the most coveted ad space has proven nearly impossible to create.
Enter MediaEquals, a new U.K.-based player with ambitions to secure the whole world's media inventory on its system. MediaEquals is currently running trials with six major media buyers -- Omnicom, WPP, Publicis, Aegis, Interpublic and Havas -- and with media owners, including BBC Magazines, The Guardian Media Group and Bauer Publishing.
"MediaEquals' ambition and vision is different," said Jim Marshall, chairman of Publicis Groupe's Starcom U.K. "It's not for niche parts of the media and online; they want to create an electronic online trading system that covers all media -- and it's not about distressed sales."
MediaEquals is by no means the first to go down this road. Google's AdWords, Yahoo's RightMedia, and Microsoft's adECN have all managed to capture previously untapped business at the lower end of the ad market, making it easy for local and smaller advertisers to buy targeted ads online. Even Google has backed away from more ambitious plans to sell print and radio ads (although its fledgling Google TV program is still in place).
MediaEquals' system, which has been in development for three years, claims to offer something more than rival auction-based or pure transaction systems. The founders claim that it replicates the way media is bought and sold in the real world and acts as a vehicle to free up time that can be invested in creativity and developing contacts.
MediaEquals is headed by entrepreneurial executive chairman Martin Banbury, founder of media and marketing group The Mission, part owner of insurance group Insure & Go, and a former brand manager at Procter & Gamble.
Mr. Banbury has just expanded the board to signal his international ambitions. Non-executive chairman John Farrell, until recently president-CEO of Publicis' SAMS Worldwide, and non-executive director Hannu Ryopponen, ex chief financial officer of Ikea, sit alongside a media owner, an online entrepreneur and a financier. The idea is to eventually get MediaEquals' trading system up and running beyond the U.K., including in the U.S.
"The media industry is pretty well-run and the next step change requires a technology breakthrough," Mr. Farrell said. "MediaEquals potentially brings this. It allows agencies to focus not on process and implementation but on value-added strategic thinking. For media owners it allows them to worry less about the management of inventory and spend more time on the creative end of their inventory. It's anything but a commoditization -- it allows a focus on creativity."
What the industry needs
Whether MediaEquals has the solution, the problems of a complex marketplace and the proliferation of media have resulted in frustrated agencies and sellers spending increasing amounts of time on administration.
"There's no doubt the industry will have to move to online trading systems, just because of the sheer volume of inventory and its demand on time and resources," Mr. Marshall said. "There's a lot going on in this area -- the value of an online trading system is all about reducing processing costs. Can MediaEquals do that? It's debatable, but it's what they are setting out to do and they have got it more right than most."
Danny Donovan, managing director of Initiative London, said, "Previous attempts to launch online media-trading platforms have had only marginal success, primarily because they have tried to change the trading process rather than build on existing practices. MediaEquals has approached the problem from the other end -- what the industry needs, not what the internet likes it to accept."
"We are replicating the way that people trade now but in electronic form," Mr. Banbury said. "We won't increase the level of commoditization -- we could reduce it by freeing up more time for people to spend on the phone building and using relationships to make sure they're doing the best job possible. The holy grail is efficiencies without commoditization."
Mr. Marshall, however, said, "MediaEquals says it reflects the way the market trades, but to come up with a really efficient system you will have to impact the way media owners trade and price."
MediaEquals allows for regular trading, but the negotiations take place online, providing a useful record of all conversations in the process. All inventory is instantly updated, and every individual must log on to the system.
Matt Teeman, director-ad sales, BBC Magazines, said, "For us, this is definitely not about selling distressed inventory; it's about getting more eyeballs on our core media in a way that may actually save us and our advertisers time."
"We are not taking the art out of buying and selling -- we are improving it," Mr. Banbury said. He gave the example of an advertiser at the last minute pulling out of a prime spot, such as a 30-second commercial booked on the Super Bowl. Instead of getting the sales team to make individual phone calls to their contacts (making sure not to double up and sell the space twice), they can send out an availability notice to every relevant client, with the expectation of securing a decent price.
Another function allows media owners to vet which marketers have access to their space. A "black, white and gray" system blocks out some buyers completely, allows some full access and lets others view but not trade certain space.
MediaEquals works via the web and won't charge for use of the system. It will instead charge media owners a "tiny proportion" of the value of each trade, which Mr. Banbury claims will be a lot less than the improvement they will see in overall trade.
Mr. Banbury has some even more radical plans for MediaEquals in the long-term. He wants to develop the technology to accommodate a brokerage system, where marketers, media buyers and even city traders can buy options on future space -- perhaps, for example, during premium events such as the 2012 Olympics -- and even sell on those options as futures.