Bid4Spots Extends Reverse Auctions To Online Display Ads

With its reverse auction marketplace for radio advertising inventory, Bid4Spots.com has attracted some 3,200 radio stations -- or about 23% of the 14,000 total in the U.S. -- and more than 6,000 advertisers. Now the Los Angeles-based company is expanding its Web-based platform to the online display ad market with the aim of giving small and medium sized business a cheaper, easier way to advertise online.

Bid4Spots' reverse auction system works for Internet ads essentially the same as for buying and selling radio spots: Ad Buyers set their campaign parameters, such as target market, audience and category, and the maximum price they're willing to pay per CPM. Participating publishers -- the sellers -- then compete by bidding down the price of their unsold inventory to win an advertiser's spot. (See a demo here.)

And as with radio, auctions will be held each Thursday from 8 a.m. to noon PST, with display inventory sold only for the following week. Through its time-constrained approach to online bidding, Bid4Spots is effectively trying to place boundaries around what is typically an ongoing, open-ended process for online media buying via ad networks and exchanges.

The weekly auctions are intended to serve as a simpler option for small businesses that don't have the resources to hire a digital agency or expertise to participate directly in more complex ad-trading systems. And because Bid4Spots doesn't offer the more sophisticated level of audience targeting as agency-based systems, pricing will not be as high.

Advertisers, for instance, can specify demographic parameters such as the age range and gender of an audience as well as a national or local geographic market, but not target by scores of different behavioral or psychographic attributes. "Advertisers not only want the system to be easy, but at the end of the day they want value," said Bid4Spots Chairman and CEO Dave Newmark.

John Ebbert, managing editor at AdExchanger.com, which tracks digital ad systems, said the Bid4Spots approach could work for online ads as long as advertisers weren't trying to buying audiences on a more granular basis.

"In theory, advertisers get a better opportunity in real-time bidding- enabled display [ad exchanges] where they can look at each publisher impression and figure out what it's worth to them," he said. "What the Bid4Spots auction seems to say is that all impressions are the same, so let's see who will do it for the best price."

The company sets a minimum $500 spend per auction, and advertisers can specify minimum and maximum limits for impressions per day along with the highest CPM they're willing to pay. The higher an advertiser sets the ceiling CPM, the more competition it can generate among publishers, which can bring down the resulting pricing, according to Bid4Spots.

But Newmark said publishers can still achieve better pricing than they might otherwise through an ad network through the platform's PowerBidder tool, which automatically determines which ads publishers should bid for to sell the most inventory based on the number of spots and rates at which they want to sell.

When it comes to ad content, Bid4Spots' platform offers standard IAB units for which users upload their creative elements. But the company has also lined up about 25 freelance ad copywriters and designers to help advertisers if they need more assistance with campaigns.

Newmark said he expects some of the company's existing radio advertisers to now use Bid4Spots for online placements, and also anticipates that more online companies will use the system to advertise in their own medium. The first auction will kick off Jan. 6 for ads to begin running Jan. 10.

  The Bid4Spots news comes close on the heels of reports indicating that the Internet is still experiencing a glut of ad inventory: according to comScore, the number of ad impressions in the U.S. market increased 22% from about 1.06 trillion impressions in the third quarter of 2009 to 1.3 trillion impressions in the third quarter of this year. Meanwhile, remnant ads will remain the fastest-growing online ad category at least through 2011, according to ThinkEquity analysts William Morrison and Robert Coolbrith. In 2009 Morrison and Coolbrith estimated that total non-premium ad revenues increased 32% from $3.1 billion in 2007 to $4.1 billion in 2008, representing 18% of the display market that year.

 

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