Online Auction For TV Ads Draws Mixed Opinions

New York A plan by a group of the nation’s leading marketers and media agencies to test an online auction to buy and sell TV ads on eBay is being met with both intrigue and skepticism.

While many industry players hope to see an alternative to the existing, antiquated way of buying TV time, the fact that no sellers have yet signed on to this test is not surprisingly tempering expectations.

Leaders of the marketing coalition acknowledge that they need to get participation from a broad swath of vendors in order to conduct a viable trial of the online marketplace, called E-Media Exchange, which is scheduled to begin in the first quarter of 2007. One senior cable sales executive—Joe Abruzzese, president of ad sales for Discovery Networks—is a member of the exchange’s steering committee, but the network has not yet committed to providing inventory for the upcoming test, a network representative said.

Sellers are skeptical for a number of reasons. “We are hearing from our advertisers and our agencies that we need to be more accountable and provide a better explanation of the return on investment and help them come up with big ideas and smarter brand messages,” said the head of sales at a broadcast network.

“We’re working with them more closely than ever before on solutions that include complex placements and integrations, and now these same marketers are saying in effect, that was a really good big idea but I have to go buy this online? Where’s the value relationship?”

That said, the executive did not rule out participating in the exchange at some point after getting a lot more information about it. “We have to see and feel and really touch what that test is,” the sales head said.

Agencies involved in the exchange said the test would hopefully attract cable networks and local broadcast stations, which are creating thousands of new digital channels—most of which have room for advertising. “We need all three prongs of this relationship to endorse the exchange for it to move forward,” said Steve Grubbs, CEO, Omnicom’s PHD North America and a member of the exchange’s steering committee. “The next step is to have more formal talks with key members of the sales community.”

But Val Napolitano, president and CEO, Petry Television, which sells time on behalf of local TV stations, said an auction “diminishes the value of a network or station’s inventory. That asset is the profile of the audience for a particular show, network or station and it has incredible value.”

Grubbs countered that in casual conversations he and other exchange participants have had with potential vendors, “once they’ve heard the explanation of what it really is, that we’re not out to eliminate the upfront or eliminate sales people, they say, oh yeah, I get it.”

So far about a dozen marketers have signed on. Lexus and Wal-Mart have confirmed their participation, and sources said that others who have signed on include Microsoft, Intel, HP, Philips, Home Depot and Brown-Forman.

Sources said the advertisers already enlisted collectively will spend about $50 million purchasing ads on the exchange. But sources said that more marketers are expected to sign on in the coming weeks as word of the project spreads, and that total spending during the trial could top $100 million.

The electronic platform, framework and technology for the project is being supplied and managed by eBay. The test of the exchange will begin in the first quarter of 2007. A Web site, www.admarketpilot.com, has been established for marketers, media companies and agencies to register to participate.

Many logistics and ground rules have yet to be worked out, said Ann Bybee, corporate manager, Lexus advertising, brand and product strategy. The steering committee will meet in September at eBay to work on such details, she said.

Bybee stressed the new system is not designed, at least for now, as a replacement for the upfront marketplace, where TV advertisers buy about 75 percent of their ads for the upcoming season. Rather, she said, it’s seen as an alternative to buying spots in the so-called scatter market.