Discovery Explores Online Exchange, Will Attend eBay Pitch

While top selling executives at networks from NBC to the Hallmark Channel have rejected a proposed online media-buying auction, Discovery Networks' Joe Abruzzese is open. He's the only seller to publicly express a willingness to consider participating. That's why he plans to attend a two-day planning session next month at eBay headquarters to see how the system might work.

The eBay-enabled system, known as the e-Media Exchange, is being driven by a task force of advertisers and agency execs looking for a way to modernize and streamline parts of the television (and other media) buy-sell process. Abruzzese, Discovery's president of ad sales, has not committed any of his network's ad time, preferring to describe himself as "open-minded" about the proposal. He is inclined to make decisions while sitting at the table.

"If clients are interested, I'd rather be involved," he says. "If you don't embrace an idea that may change the business for the positive, nothing changes. If we sit through these meetings and we decide it doesn't work, at least we've learned something."



The gathering in northern California the week after Labor Day is expected to include presentations from executives at eBay. It will also give the advertiser-agency task force a chance to advance its own plans to develop logistics for a planned test in early 2007. Working committees could be formed, and assigned specific roles.

Abruzzese may not be the only seller present. Steve Grubbs--CEO of agency PHD USA and a task force member--says two other sellers may attend. Others have shown an interest and may eventually participate, although he declined to name them.

Grubbs did say the task force is ramping up outreach efforts to the sales community; without inventory for sale, the auction is DOA. Grubbs also says interest from Abruzzese is key--not just from a participation standpoint, but an advisory one.

"We need to make sure we get some of the best and brightest minds in the business to work through details to make sure we get this right," he says. "Joe knows the business as well as anyone and can help us craft the structure."

One proposal calls for the system to be a reverse auction. Advertisers would delineate what they're willing to spend and for what inventory, then media companies would bid for the dollars--a process likely to drive prices down. Even though task-force members such as Wal-Mart and Home Depot have committed to pool $50 million for the test, some leading sales executives have said that bounty--or any amount--doesn't tempt them.

NBC Universal Television Group President-COO Randy Falco has called the proposal "ridiculous," while Bill Abbott, evp of ad sales for Hallmark Channel, says he "absolutely" and "unequivocally" will not participate. Both Falco and Abbott have suggested that the process commoditizes their inventory.

Other sales executives have questioned why advertisers that are pressing sellers to devise multifaceted, holistic media opportunities--product placement, brand integration, sponsorships and other newfangled touchpoints--would also lobby for a rudimentary swap of spots.

Abruzzese concurs: "There is a disconnect between what I'm hearing from clients and this. I'll ask clients the question [at the e-Media Exchange meetings], if you want more bang for your buck, doesn't this go against it? But that's why I'm there--to learn."

Grubbs counters that this move is not meant to take "the relationship part of the business out of the equation."

Buy-side participants in the e-Media Exchange have suggested that sellers "will benefit from...greater operating efficiencies." But Abruzzese shot that notion down, at least from Discovery's perspective. "We don't need this for efficiencies."

While Abruzzese, who oversees sales at 13 U.S. networks, has many questions about the e-Media Exchange's viability, he says it could be effective for networks that have trouble selling out. But he wonders: "Is that really what clients want? More lower-tier stuff?"

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