• by Wayne Friedman , April 9, 2007

Cable network executives were caught off-guard by the proposed eBay auction system because of one glaring component: the price.

Which explains, in part, why the Cabletelevision Advertising Bureau (CAB) rejected the idea. Participating cable networks would need to pay a 2% fee for each transaction--an enormous price, said one veteran cable advertising sales executive. "Two percent is huge," says Bill Abbott, executive vice president of advertising sales for Hallmark Channel. "We live and die on those 2% to 3% percentages. For the media agencies, it's the same thing--living in those margins."

Still, the CAB said it hopes to find a better approach to electronic media buying. For the last several weeks, cable executives have been analyzing the eBay system. Beyond price, there were other, deeper issues. First and foremost, cable network executives didn't think the system was sophisticated enough.

"There were a lot of manual calculations--for instance, inputting factors such as cable subscribers, VPVHs (viewers-per-thousand) and ratings," said one veteran cable sales executive. "Also, it doesn't incorporate things you need in today's market--like product integration and other added value. It had, if you can believe, a "comments" box for all that."

As for the main point--saving time--cable network executives say the eBay system didn't deliver. "This was essentially an electronic RFP system. But that's the least time-consuming part of anything we do. This system was supposed to save time. It doesn't do that."

Critics had worried that the eBay system would commoditize their business--at a time when advertisers increasingly add integrated marketing and brand entertainment to their media buys.

While many big-name media agencies participated in the task force that resulted in the proposed eBay system, media agencies such as Starcom MediaVest Group, MindShare and Mediaedge:cia didn't support the new system.

Cable executives were not the only people who are surprised the proposal was axed. Executives at eBay were stunned at the timing. The Internet company had many meetings with the CAB during the year, and had one scheduled with the organization this past Wednesday--until the meeting was abruptly canceled.

"The only response we got from them was their press release," said Brad Williams, vice president of communications for eBay. "We were pretty troubled by that. But the CAB doesn't dictate what its members do. It's not a cartel. It's a trade association."

Is eBay talking separately with cable networks?

"I'd rather not talk about it right now," said Williams. "Our interest is to continue to work with the test. We are not sure this represents a rejection for the entire cable industry."

Williams admitted that eBay isn't an expert in media buying and selling, but that the company was open to discussion. "We made it clear to them everything is up for discussion--the platforms, the features."