Electronic Media Buying Exchange in Works

Aug 4, 2006  •  Post A Comment

A group of advertisers and media agencies plan to test an electronic exchange for buying TV ad time.

The pilot program, called e-Media Exchange, is scheduled to begin early next year and will rely on technology developed by eBay.

The group said the exchange is designed to be an adjunct to the existing media buying system and not a replacement for the upfront market. The effort to create a Nasdaq-like market for advertising has been pushed by marketers unhappy with the high prices and the need to buy ads months before they run that are inherent in the current upfront market.

“We are in a rapidly evolving, increasingly complex media environment with a myriad of content choices and distribution channels. To be effective in the future, our processes must embrace the advancements in technology and the benefits of our digital world,” said Ann Bybee, corporate manger of brand and product strategy for Lexus Advertising and a member of the task force behind the e-Media Exchange.

The idea has been percolating since last year and was discussed during the ANA Advertising Financial Conference in May. In the past, media companies have resisted the idea of essentially putting their advertising up for auction. They’ve sneered back at the idea by asking why a company like Dodge doesn’t put their cars up for sale on e-Bay.

The task force says the e-Media Exchange can be good for media companies. “It is expected that that sellers will benefit from increased revenue, new advertisers and greater operating efficiencies,” the group said in a statement.

Carat North America President Ray Warren, another task force member, said the success of the test “will be measured against participation by both the advertising side and the vendor side.”

Mr. Warren said he doesn’t think it likely that all media buying would be done over this exchange. “There’s always going to be a bunch of people who will probably not participate, both ad-side and sell-side,” he said.

That means media buyers will still have plenty to do. Mr. Warren said that with digital broadcast on TV and radio and more channels getting distribution through digital cable and broadband, “You need a way to look at all this inventory and evaluate it and buy it.” On top of that, big media networks are selling increasingly complex packages involving product integration and digital extensions as well as spots, and those also require attention.

With the TV marketplace cooling off in recent years, ad buyers and advertisers have gained leverage and have been able to stall increases in commercial prices. In that environment, networks might be more willing to pursue ad dollars available via some form of automated auction system.

But, Mr. Warren said, “We’re not announcing it because the market was strong or soft. What we’ve tried to do is take the market forces out of this whole discussion, because then it becomes a conflict issue.”