Big 3 Explore Online Exchange

The three largest advertising holding companies are putting the final touches on a plan to create an online exchange where media can be bought electronically.

If it succeeds, the partnership between Omnicom, WPP Group and The Interpublic Group of Cos. will provide a single standard of electronic buying that would move the process out of the paper past and into the digital age.

“We’ve been in a dialogue with WPP and IPG to explore the establishment of a digital media exchange that would be a common platform the entire industry can use,” said John Wren, Omnicom CEO.

The new entity will probably be managed by IPG, but no decisions have yet been reached on an executive to run the new venture or even what it will be called. However, its general outlines are clear.

“This will not be a negotiation device,” said one source. “Proposals may go through [the consortium], but a verbal negotiation will still take place.”

The discussions, which have been ongoing for several months, have taken place at the top level, with the leaders of all three holding companies directly involved, plus top executives at the three parents’ media agencies: OMD, Initiative Media and MindShare.

The promise of dramatically increased productivity and cost savings through electronic media buying has received a great deal of attention in the Internet era. Most agencies already do part of their purchasing electronically, and literally dozens of startups in recent years have sought to sell software and other electronic-buying technology to the ad industry.

None of these efforts, however, have succeeded in winning more than initial interest or trial use by agencies and media sellers—”lots of people with proposals that were just VC plays,” as one agency head described them. Moreover, nothing close to a universal standard for buying electronically has ever been attempted before.

“Unless several of [the largest media buyers] backed the same idea, there were too many different players to have any kind of agreement,” said one source. “And what people were talking about were exchanges with auctions, which is not suited to our business,” the source added. “This has to cross media, and it has to be an open system … a single standard everybody complies with. Other industries have [online buying consortiums]. We should have one, too.”