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eBay's ad auction may show the future of at-retail media sales

Author: Bill Gerba on 2006-08-09 08:22:00

Friday's Wall Street Journal ran an interesting article about eBay's plans to simplify today's complex system for buying and selling TV ad space. (Red Herring also provides a good overview of the story.) The new service, dubbed either mediamarketplace or e-Media Exchange, depending on who you ask, combines the real-time auction experience of eBay with the media clout of many of the nation's top advertisers, including Wal-Mart, Microsoft, HP, The Home Depot and Toyota, in an effort to "accelerate the recent shift in bargaining power to advertisers and possibly drive down average prices." This experiment has implications for traditional media as well as emerging channels like in-store TV, but first let's take a look at what eBay's new system has to offer.

At the heart of eBay's program is a web-based application for so-called reverse auctions: instead of posting a time slot and having potential advertisers bid up the price, advertisers (normally the media buyers) will instead post their specifications for upcoming spots, and those who own the airtime (the stations, studios and media holding companies that normally do the "selling") will bid for each of those opportunities. By turning the traditional model on its head, eBay and its partners hope to not only make the entire process of media placement faster and more efficient, but also to help level the playing field between the large advertisers and their smaller competitors for TV ad time.

While the dual-goals of making the process more efficient and more fair will appeal to many buyers and sellers alike, there are certainly some groups who would like to see the eBay experiment fail. Chief among them: the big networks (who currently drive the entire sales process, manage the timetables, and have basically every advantage when it comes to setting prices), some of the major advertisers (whose massive buying power gives them superior leverage in one-on-one negotiations), and the big media conglomerates (who currently get advantageous pricing for multitudes of smaller clients by pooling their ad budgets together).

Still, when a number of big and small buyers (including the companies mentioned above) try out the system with an undisclosed cable provider this January, you can be sure that all of the relevant parties will be keeping a close eye on the results. A successful launch could spell the beginning of a massive overhaul of the current media buying landscape, and could even give some new life to network TV ad sales. A failure, on the other hand, will likely reinforce the status quo in TV land. While the networks and many major ad firms might breathe a sigh of relief as the winds of change subside, the little guys would be left bidding on overpriced, under-performing time slots. The same situation is playing itself out in other arenas as well, as evidenced by Google's agreement to deliver ads on XM Satellite Radio, which also promises to bring significant automation to what used to be a negotiation-heavy radio sales process.

Over here on the other side of the media fence, how will at-retail media be affected by this trial and others like it? Well, we know that more brands and agencies are experimenting with out-of-home media, often taking funds out of their TV ad budgets to do so. Thus at first glance, one might think that a failure for eBay's program would be good for our marketplace. After all, the status quo stays the same, and following the latest trends this would translate to more money for retail media providers in the coming years. On the other hand, it's not hard to imagine how an automated clearinghouse for TV ads could be extended to support digital signage networks, and a unified system that handles both would certainly go a long ways towards getting the typical media buyer to consider purchasing time on in-store TV networks. So maybe success for eBay today could give our industry better access to advertisers in the years to come.

I'm personally leaning towards the latter, and as reinforcement I recommend you visit admarketpilot.com, where you can sign up for information about eBay's new service and its upcoming pilot. While slim on details, the list of possible media to buy and sell currently includes cable and broadcast TV, radio, print and "other". This could eventually include any number of schedule-able media, like billboards and other outdoor media, as well as in-store TV networks and digital signs. If successful at the national level, I could even see eBay expanding their offering from media purchasing to scheduling, giving customers the same level of time and location specificity for TV schedules that we currently find in modern digital signage networks. By making the process of purchasing and managing time on TV similar to that of purchasing on digital signs, eBay may inadvertently pave the way for new multichannel marketing strategies that can efficiently deliver a consistent message to customers, regardless of which media they consume.

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