• by Wayne Friedman , David Goetzl  @dgoetzl, August 7, 2006

A day after advertisers' fledgling plans for selling ad time via an online auction were revealed, several cable network executives cried foul. They said the initiative has a self-contradictory element. Advertisers want multifaceted marketing campaigns--but they can't be executed, given the limitations of e-commerce.

With the rise of DVRs and demand for engagement, marketers are seeking campaigns that go well beyond traditional spots to include product placement, mobile extensions, sponsorships, and branded vignettes. According to cable executives, it's impossible to sell the holistic package the advertisers are pushing on the eBay-enabled auction.

"It's counterintuitive to what they're asking for," charges Chris Raleigh, senior vice president of ad sales at GSN. His network has been pitching marketers on multiscreen interactive campaigns involving TV, the Net, and mobile devices.

"We tailor our offerings to our clients' needs and take advantage of opportunities that you can't purchase through an online option," says Bill Abbott, senior vice president of ad sales for Hallmark Channel. He says it's not a commodity "in which you can package everything together and put a price tag on it"--calling it a very "simplistic approach to the business."

Abbott, who "absolutely" refuses to participate in an e-Media Exchange, notes that product integration and sponsorships require negotiations and mutual strategic planning. Such efforts go far beyond placing bids in an attempt to one-up a competitor.

Another sales executive at a lower-tier cable network, who declined attribution, says: "They just don't buy spots and dots, so why would I participate in a spots-and-dots auction? Nobody buys me that way."

Concerns from sales executives at mid- and lower-tier cable channels could be considered a bad sign for the task force behind the initiative, since smaller cable networks (and some syndicators) are believed to be more likely to get involved on the sell side. Top executives at ABC and NBC have stated they have no intention of participating. If no sellers sign up, the initiative could be DOA.

But Mike Donahue--executive vice president at the AAAAs, an organization supporting the auction's development--said that it may allow buyers and sellers to spend more time hashing out multifaceted communications plans. "This is not going to eliminate the buyer-seller value chain," he says. "If anything, it will enhance it." Donahue believes it takes some of the drudgery away, allowing "more time to be spent on going beyond spots and dots."

A call to a task force spokesperson was not immediately returned. The group plans to launch a test of the program early next year. A pool of $50 million is to be made available for networks to bid via reverse auctions.

One leading cable sales executive, Joe Abruzzese, president of ad sales at Discovery Networks, has agreed to participate in discussions with the task force, The Wall Street Journal reported, and a Discovery representative confirmed.

Although all cable sales executives contacted expressed skepticism, not all are ruling it out. GSN's Raleigh says he would be interested in learning more details about the plan. "But for the majority of what we do, we take pride in and have success with marketing around interactivity," he says. "You can't do that as a commodity."

"My initial reaction was negative; it smacks of commoditization," says a veteran syndication sales executive. "But now, I can see it from the buyers' perspective. Media agencies have fewer people to work with. I want more details about how it works. It might free up resources."

The task force says the system will allow both buyers and sellers to benefit from improved "operating efficiencies." The AAAAs' Donahue says the task force does not intend for the system to facilitate buying and selling of top-tier inventory, such as prime-time hits. But it would like to ease the process of transacting lower-demand avails in dayparts, such as the afternoon or overnight. "There is not a market mechanism to allow marginal and niche inventory to be bought and sold efficiently," he adds.

"We believe there is value [in our inventory] and it isn't a commodity," counters an executive who oversees multiple channels. "As much as it would be good for the ad community to commoditize it, we try not to do that."

Both GSN's Raleigh and a second executive who declined to be named say their networks do a healthy business with direct-response advertisers during daytime blocks, so the system would have to yield higher rates.

The Journal reported that the task force plans to approach other sell-side executives in the next few weeks.