Low Bid: EBay TV Ad Sales Lag Behind Google

NEW YORK It’s been six months since eBay and Google each launched online systems to buy and sell TV ads. So far the results have been markedly different: Google is off to a promising start while eBay last week admitted it is “disappointed” by the early response.

Mike Steib, director of TV ads at Google, said the company’s system has sold more than 100,000 spots to “dozens” of marketers, including several of the top 10 advertisers from key ad categories (autos, packaged goods, entertainment, etc.) since its May launch on satellite carrier Dish TV.

“From a business standpoint, it’s been really successful and encouraging. We’re off and running,” Steib said.

At eBay, the initial results have been far less encouraging. When the auction site unveiled plans in August 2006 for an electronic marketplace to buy and sell TV ads, it had hoped to attract a broad swath of cable networks to participate. This was in addition to a handful of charter advertisers who had earmarked $50 million to the project, said supporters of the initiative at the time.

So far the eBay service has fallen short of those expectations. Only three networks are known to be participating—Oxygen, Ion (formerly Pax TV) and TV One—and only Home Depot and Intel are believed to have purchased time through the system.

EBay declined to comment on whether other networks or advertisers have conducted business on the system. A representative said that, to date, advertisers had issued requests for ad time totaling “several million,” but it is unclear what percentage of those orders have been fulfilled.

Howard Rosenberg, director of eBay trading platforms, declined to be interviewed. But in response to queries, the company issued a statement that said, “We’ve been disappointed by the lack of broad engagement by cable networks. This has caused the initial testing to be slower than expected.”

Despite the lackluster response, eBay stressed that it is not giving up yet. “We’re continuing to test and evaluate the system, and we encourage other networks to participate in making offers,” the eBay statement read.

Why the different degrees of success coming out of the gate? In a follow-up statement, eBay offered its own theory: “It seems that the cable networks who are not participating still fundamentally misunderstand how the marketplace works … Some seem to believe that it is an auction marketplace in which the high bidder wins and the network loses control over setting their own prices. That is not the case.” Rather, eBay explained, its system is RFP based, with advertisers requesting proposals and networks responding. Then a negotiation takes place through an exchange of e-mails, and the parties either come to terms or they don’t.

But others offered a different reason for Google’s greater success: It is tying its auction ad sales data to viewing information generated from Dish TV set-top boxes. And it’s sharing the combined data with participating marketers and agencies free of charge. (Marketers don’t have access to competitors’ information, however.)

With the Dish TV data, an advertiser will know the day after ads run what percentage of households tuned out of ads and at exactly what point (down to the second) a viewer changed channels to avoid an ad. Marketers can run their spots across 94 different channels aired by Dish, including big cable networks such as Discovery, Lifetime and ESPN, niche channels like CSTV and regional sports networks. This allows advertisers to compare different tune-in-tune-out levels for their ads across an array of networks, programs, pod positions and dayparts.

The CEO at one major media network said the agency and several of its big clients were participating in the Google auction, and not the eBay system, because Google was sharing data that the eBay system does not provide. “We’re not sure if the ad auction model is right, but we want to learn from it,” the executive said. “Google is offering data that may advance our consumer insights and make transactions more efficient. With eBay, it’s a marketplace change with no benefit.”

Although Google has made progress, buyers say at this stage its model is perhaps more viable for mid to small advertisers who haven’t been buying TV that long. Compared to eBay, “Google is way ahead of the curve,” said Christine Merrifield, svp of the video investment and activation group at Publicis Groupe’s MediaVest.

Despite that, Merrifield asserted that Google is missing a key data point—demographics–that will likely prevent the service from picking up national distribution beyond the 14 million household universe that Dish provides. “They’re on the path to getting there, and that will be the golden key to getting into more doors at both clients and networks.”

That said, the Google data has made client Jenny Craig a believer, said Mary Fritz-Wilson, director of media and analysis for the weight management company. Jenny Craig, which completed a test with the system, has since made a longer-term agreement with the service, said Fritz-Wilson. “We think it’s the wave of the future,” she said, adding that as Google expands its footprint and inventory beyond Dish, “we’ll be right there buying it from them.” The client has not done business with eBay, but Fritz-Wilson said her company is exploring it.

Although eBay’s system is getting off to a slow start, one of its network participants, Oxygen, said eBay has the preferred model. “I wouldn’t give a third party access to inventory and lose control of pricing,” said Mary Jeanne Cavanagh, vp of sales at Oxygen. “With eBay we stay true to our rate card.”

Others see merit in both systems, including Andy Donchin, evp, director of national broadcast at Aegis Group’s Carat. “With eBay it’s less about the research and more about the process, but we want to refine both. I just don’t see any reason not to be involved.”

Besides, he said, in little more than a year the television industry will complete its transition to digital. “There will be an explosion in the number of channels. Can we hire all the people we need to buy all those additional channels? That’s where a process like this could really help,” Donchin said.