eBay Pitches eBiz, Big Advertisers Consider Online Media Auction Service

by , Jan 25, 2006, 8:02 AM
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Perennially in search of a better market structure for trading media time and space, the ad industry has been courted by Enron, Freemarkets.com, and even Google. On Tuesday, some of the nation's biggest advertisers got a pitch from a surprise media buying "solutions provider:" online auction service eBay. Details of the presentation, and the reaction of the ad executives--members of the Association of National Advertisers influential Television Advertising Committee--could not be discerned at press time, but executives privy to the meeting told MediaDailyNews that eBay was invited by the committee to present ideas for building an electronic trading system for buying and selling media.

The presentation and the committee's meeting were the latest step in an initiative proposed by DaimlerChrysler Director of Marketing Communications Julie Roehm during the ANA's March 2005 Television Advertising Forum in New York. Roehm made headlines when she proposed the creation of a "Nasdaq-like" system that would create an open and transparent marketplace for trading advertising inventory, and outlined her proposal in a subsequent article in the ANA's The Advertiser magazine.

Press attention may have subsided, but interest in the initiative has remained alive within the ANA, and the committee is acting as an informal task force, which has met with a variety of vendors proposing alternative marketplace solutions. The effort also coincides with a broader push for so-called eBiz media solutions that has been championed by the American Association of Advertising Agencies, with support from the ANA (MediaDailyNews Jan. 16 and Jan. 20). The eBiz initiative is a major focus of the AAAA's, and will be a key part of its annual Media Conference and Trade Show March 1-3 in Orlando.

But while the eBiz efforts are designed to weed out the time-consuming and labor-intensive steps involved in Madison Avenue's current paper-based buying systems, the initiative being championed by Roehm--soon to be senior vice president of marketing communications at retail giant Wal-mart--goes a step further, seeking to create a so-called open market structure, in which all of the information between buyers and sellers is transparent.

Some marketers see this as an important step in equalizing a perceived imbalance between the sellers of some media--especially the major TV networks--and their customers. Others simply see it as part of a new corporate imperative toward greater disclosure in an age of Sarbanes-Oxley corporate compliance.

"What if we put in place an electronic trading system where everything is out in the open?" said one attendee, adding: "People equate this to Enron, but this is not Enron. Enron wanted to control the exchange. Here the industry would control the exchange."

The executive was referring to attempts by Enron Corp. to expand its energy trading systems to the media industry in the late 1990s and 2000, just before the stock market crash brought the high-flying "new economy" player to an end, and exposed some questionable business practices in the process. Before it went under, Enron had formed Enron Media Services, and was actively engaged in conversations with major advertisers and agencies, and claimed to have a massive, multiple-year "hedge" advertising deal with a major media company.

Enron, of course, was not the first or last player to try to form an electronic exchange for buying and selling media. A number of vertical exchanges were created during the Internet build-up of the late 1990s, including such names as Adauction.com, and Media Passage--all of which have since gone bust.

In 2000, one major advertiser, Pittsburgh-based food marketer Heinz, even conducted a live market trial for purchasing a portion of its network TV advertising buys via online auctioning service Freemarkets.com (now Ariba). While that trial--a so-called "reverse auction" in which sellers bid each other down until they arrive at the cheapest price for the buyer--was deemed a success by Heinz executives, the company is believed to have gotten a lot of heat from major media companies, and never repeated the experiment.

Recently, Google has begun incorporating off-line media--including magazines, newspapers, and most recently, radio--as part of its AdWords advertising program, and some observers on Madison Avenue believe it plans to go much further, providing an electronic system for buying and selling media--a development that has generated great interest, but also a case of the jitters, on Madison Avenue.

To be sure, members of the ANA are mixed on prospects for an electronic trading system. While some see it as an opportunity for greater efficiency and transparency, others see it as a potential Pandora's box, which could destabilize a marketplace that for all its faults, is known to work pretty efficiently for those who know how to play it.

"There are a whole slew of operational reasons why this is very difficult to implement," said the attendee, adding: "There may be so many that it is not feasible to do this. But if you're looking at creating a more favorable system for exchanging information between buyers and sellers, I'm all for that. Clearly, the eBiz elements of this are compelling."

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