Gold-Star Marketers, $50 Million ... Now All They Need Is a Media Partner

Lexus, Others Join eBay to Test Online TV Auction

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The first marketer-led online trading system for TV airtime edged closer to reality last week as a group of major advertisers issued details of its pilot plan.

Wal-Mart Stores, Lexus, Hewlett-Packard and Microsoft, among others, have already drafted eBay to set up a test TV exchange and are soliciting support at an informational website, The system, named eMedia Exchange, is scheduled to go live in early 2007 and could revolutionize the $68 billion TV advertising business. As yet, the website carries little more than a call for registration, but interestingly asks which other media beyond TV marketers might want to buy online.

Ann Bybee, corporate manager-advertising, brand and product strategy at Lexus, issued an open call to marketers to join the initiative, which is supported by both the Association of National Advertisers and the American Association of Advertising Agencies. "This is a formal call to encourage all advertisers to participate in the online exchange," said Ms. Bybee, adding: "This area hasn't seen change in 20 to 30 years." She said the online trading system is not intended to replace the upfront, but it could be useful in replacing scatter buys.

The cross-industry task force quickly partnered with online auction system eBay, which will manage the framework of the technology but may not end up executing the project long term. Google, licking its chops at the prospect of entering the near $70 billion TV ad business, wasn't chosen as a partner because it was viewed as an unnecessary third party. EBay was seen as more neutral.

Already lined up to pour in excess of $50 million, in total, into the media-buying test are Wal-Mart, H-P, Microsoft, Brown-Forman, Philips Electronics and a handful of others. Ms. Bybee was confident others would join once they learned more details of the plan.

they're listening

The experiment needs a media partner to make it viable, and Ms. Bybee hinted that national cable channels have been talking to the group. Discovery Networks Ad Sales President Joe Abruzzese is on the advisory board, and the group is also considering partnering with syndicators.

Why would media vendors be involved in the program? It's simple, said Sean Cunningham, president-CEO of the Cabletelevision Advertising Bureau. "U.S. advertisers spend almost $70 billion on TV, and when a group of them want us to try to test something as an alternative, we have to listen," he said. "And 'we' means the programmers and the agencies that do the buying and specifying and stewarding."

He noted that cable has put a lot of time, money and effort into developing e-business applications in order to handle the tens of thousands of units a marketer may use to advertise a single product over a six-month period. "We've always known that we have a collective electronic future," he said. Still, "there are an awful lot of bridges to be crossed for this to be truly beneficial to everyone involved."

reducing manpower

There's no word on the broadcast networks, which to date have largely pooh-poohed the idea.

The marketer group-also supported by media agencies including Zenith Media, Magna Global, PHD and Carat-is set to reveal more details of the venture this week.

The test would work as a reverse auction in which media sellers would bid on specs issued by the companies involved. The system would be funded by charging both buyers and sellers to participate.

Doug Levy, CEO of Enversa, which supplies reverse-auction media-buying software, said an automated system can cut down on the manpower normally used to buy media. He recently presented his system to the ANA in Chicago and has met with Wal-Mart Senior VP-Marketing Communications Julie Roehm to discuss her plans with eMedia Exchange. Ms. Roehm, tied up with the Wal-Mart review, is letting others do the talking on this project.

The industry task force must battle stiff resistance to its idea from entrenched parties. Media agencies, for example, might feel this cuts them out of the picture, while TV executives claim an electronic system would commoditize their business.

Ms. Bybee responded to critics by saying the system would increase transparency in media-buying costs. "All I know is what I paid last year; I'd like to know if I paid fair market price."
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