Online publishers who aren’t wild about selling their remnant inventory via networks and exchanges now have a new option—and they have the radio business to thank for it.
A company called Bid4Spots.com, which in 2004 began hosting time-sensitive, invite-only auctions for radio ad inventory, has rolled out a similar product for the Web. The company’s new Online Display Media Marketplace is now open to advertisers and publishers to sign up to participate in weekly auctions, the first of which will be held on Jan. 6, 2011.
Bid4Spots.com calls its sales process a "reverse auction." Instead of advertisers bidding for ad inventory on an open exchange, advertisers set a maximum price they’d be willing to pay for ads during a given week, and then invite a select number of publishers to bid for their dollars.
The auctions are then held only for a few hours, much like an eBay auction. And unlike a traditional auction, the lowest price—rather than the highest price—wins, since ideally publishers will be enticed to underbid their competitors.
The company claims it handles such auctions for two-thirds of rated radio stations in the U.S. But Bid4Spots.com chairman and CEO Dave Newmark believes its model makes even more sense on the Web, given the glut of ad inventory. “When supply outstrips demand, a traditional auction doesn’t make sense since it drives pricing down,” said Newmark. “That’s when a reverse auction makes sense.”
Newmark said that while traditional brands may be attracted to Bid4Spots.com’s reverse auction model, he expects business to come primarily from small and midsized advertisers who are accustomed to buying search ads on the Web. Like Google AdWords and other self-serve tactics, advertisers can sign up for Online Display Media Marketplace on their own via a Web based interface—and they can pay with a credit card or PayPal account.