MediaBank, the Chicago-based ad transactions processor, is launching a new unit—headed by president John Bauschard—that’s devoted to the creation of electronic ad sales marketplaces for a variety of digital and analog media. It’s a space where big Internet companies have tried and failed.
The company's core transactions-processing operation will now be labeled the agency systems division and will be headed by Nick Galassi as president. Both Bauschard and Galassi will report to MediaBank CEO Bill Wise.
The new setup is designed to help the company’s respective businesses expand as MediaBank continues to challenge Donovan Data Systems for market share in the transactions processing space—a field where Donovan has remained the biggest player for decades.
But MediaBank has made some gains, obtaining major contracts for processing ad buys from both Publicis Groupe’s Starcom Mediavest Group and Interpublic Group’s Mediabrands, assignments once handled by Donovan. The two companies are now locked in a heated battle for a $27 billion prize: the North American business of Publicis Groupe's VivaKi. That assignment includes the holding company's two huge media agency networks, SMG and ZenithOptimedia. A decision is said to be imminent.
The foray into the marketplaces arena is an attempt by MediaBank to expand where others—such as eBay and Google—have floundered. After more than a year of trying to get a trading platform business off the ground, eBay shuttered the effort in June 2008. Google has been trying for more than three years to make a successful go of its Google TV ad auction platform. Earlier it launched and then shuttered similar exchanges for print and radio.
Bauschard says others have failed in the marketplaces arena because they have focused too much on commoditizing inventory, which sellers fear lowers prices. He continued: “That’s a flawed strategy because it doesn’t address issues"—like enabling buyers and sellers to communicate via the platform, and provide mechanisms for completing deals and verifying that ads are placed according to terms.
The first analog marketplace the company has developed is for newspapers, a platform that kicked off at the beginning of the year. Next up will be digital and then out of home, followed by others, including TV and radio, said Bauschard.
Galassi said a key priority for the agency systems division is international expansion, given that most of the big holding company media shops are looking for systems that can track transactions on a global basis as more of their clients buy that way. “That’s definitely on the forefront of what they’re trying to do,” he said.