New Traffic System Takes Root

Jul 28, 2003  •  Post A Comment

The NBC station group has selected Marketron as its traffic provider for the next seven years in a deal that could signal a large-scale shift from the legacy systems of the past to the next-generation software of the future.
The broadcaster plans to begin implementing the new system in September at KMAS-TV, its Telemundo station in Denver, and will bring all 29 NBC and Telemundo properties online within 12 to 18 months. In addition to processing the $1.5 billion in advertising generated by the NBC station group, Marketron’s TV Traffic will handle sales, inventory management and business intelligence.
Traffic’s New Guard
The Marketron system is one of a handful of so-called next-generation traffic systems that TV stations and groups have increasingly turned to over the past few years as they begin to migrate from Encoda Systems, which has been the dominant traffic provider. Along with Marketron, newer entrants include WideOrbit and OSI.
Encoda has lost 150 stations over the past 18 months, said Eric Mathewson, CEO and founder of WideOrbit. The NBC station group is the software firm’s biggest loss. Encoda did not return calls for comment.
In addition, about 500 TV stations will roll off their current traffic contracts in the next 30 months, Mr. Mathewson said. That represents an opportunity for the new guard to seize even more of Encoda’s pie, since most of those systems rely on Encoda.
NBC’s selection of Marketron could be a “watershed event” for the industry and a “wake-up call to Encoda,” said an executive at a large station group that is also considering using Marketron’s system.
“[Encoda] has lost some smaller guys and here is a huge player walking out of its camp,” the executive said.
The deal is also significant because Marketron does not have many large stations or groups on its system. “It says NBC is certainly taking a bit of a risk. The software must be that good, because the NBC guys quite frankly don’t [mess] around, and I am assuming they got a good deal,” said the executive.
NBC wanted an end-to-end solution that would link disparate departments such as sales, operations and traffic on one platform, said John Wallace, senior VP, operations, for NBC. Sales managers can view reports electronically on their desktops rather than requesting printed reports.
Marketron TV Traffic provides a real-time view into a TV station’s inventory, said Mike Jackson, chairman and CEO of Marketron.
“They can look at how their dollars did against `Will & Grace,’ how many auto advertisers they have, how many beverage advertisers they have in and can make better decisions about who to target next year,” he said. That process has been largely manual in the past.
Winning Bid
NBC spent nine months evaluating traffic providers, including Encoda’s Paradigm. The three key factors in selecting Marketron were the graphical user interface, Marketron’s experience and back-office functionality and the financial arrangement, said Mr. Wallace.
Marketron would not reveal the terms of the deal, but Mr. Jackson said Marketron bid more than $11 million for it.
As part of the deal, NBC will outsource the management and maintenance of the service to Marketron, which runs the system as an application service provider through its hosting center. Stations access the traffic system and service through the Internet. The system is also designed to manage ads with product placement elements.
A small Quorum-owned NBC station, KAMR-TV in Amarillo, Texas, introduced the Marketron traffic system in late April and has encountered a number of problems, said Dale Woods, the station’s general manager. Ten separate contracts simply stopped running in the middle of the package, which means clients were billed but the spots didn’t air, said Diana Liggitt, traffic manager with KAMR. Marketron provides its TV Sales proposal product to more than 900 TV stations. The traffic system launched three years ago and is under contract with more than 100 TV stations and installed in 60 of those.