• by May 27, 2004

VIRTUAL, BUT STILL VITRIOL, ERWIN EPHRON SUMS UP THE NETWORK TV AD MARKETPLACE -We've always paid rapt attention to anything Erwin Ephron has to say, but we were a little unsure what to expect when the folks at SQAD introduced a "virtual" Erwin Ephron to provide some testimony for their new NetCosts TV cost database. And it's not because we knew Ephron has a stake in NetCosts, it's just that we were concerned about the whereabouts of the real Erwin Ephron during such an obviously important event as the rebirth of his fledgling database. In any case, his presentation turned out to be more insightful about the current state of the TV advertising marketplace, than it did about the pitching of a new product. So for those of you who couldn't sit in on the SQAD Webcast, here's what Ephron had to say:

The failure of NUDG -- Dave Verklin's recently convened Network Upfront Discussion Group -- to come up with an agenda for changing the Upfront shouldn't fool anyone.

Advertisers still hate the Upfront. Or rather they don't like the way network TV is bought and sold.

The fourth through first quarter commitment. No company plans that way.

No significant paper trail to trace the price negotiation process. No company buys other goods and services that way.

And probably most injurious, every advertiser that buys pays a different price. And any advertiser that buys knows only the price he or she paid.

A truly open market would be far better for the advertiser than the one-on-one closed-door negotiations of today.

Like Wall Street, an image that the networks often invoke in defense of the current system, an open market would give buyers better information and a paper trail.

It would probably result in lower television costs just as open markets have done for other procurement.

But, you don't get an open marketing by talking. The first step is to pool data to let everyone know what the real prices are. Today, only the sellers have those numbers.

That is changing. For the first time SQAD with its NETCOSTS database is collecting the real prices advertisers pay for television, and making those prices available for advertisers to share.

It is the important first step to an open, fair market in Network TV.

The networks would have us believe that "The market drives the pricing." Sure it does.

But until now, only the Networks have known what the pricing is.

That is about to change.