Trial Period

The MediaPort venture, put on ice two weeks ago, accomplished at least one notable feat: It got advertising’s three dominant players—Interpublic, Omni com and WPP—to invest in and work cooperatively on a good-for-the-industry enterprise. That was a first.

Among them, the giant holding companies ponied up $5-10 million to develop a protocol for electronically automating the administrative side of media transactions. The goal was to create a universal, Internet-compatible format to “paper” all phases of media buys, regardless of agency, client or medium.

This under-the-hood part of the business is very labor-intensive; automating it could save agencies a bundle. But developing a system would be expensive and risky for any of the companies to tackle on its own, especially since, even with technical success, the other biggies would be disinclined to buy in, because that would mean enriching a competitor. Moreover, to really work, any new method would need to mesh with systems being used by media companies, which would be reluctant to adopt a separate new standard for some of their customers but not others.

Large as it is, the ad industry is probably too small to tempt any of the major software companies to step in and develop a system with hopes of peddling it on Madison Avenue. And yet meeting the industry’s requirements is too big a job for some mom-and-pop shop (at least since the dot-com frenzy) to be able to finance.

So, if insiders can’t do it, and outsiders won’t, getting a consortium of the holding companies to do it seemed a pretty logical choice. The big holding companies are fierce competitors and, so far as memory serves, have never teamed up on any business venture. MediaPort’s mere creation, therefore, was an accomplishment of some distinction.

And it actually got to first base. MediaPort established a protocol for mechanizing the bookkeeping, using XML, an Internet-friendly language. But that’s not enough of a victory from a business point of view. Until other parts of media transactions could mesh seamlessly with internal record keeping, the full savings from electronic-process administration would be out of reach.

To go further would require additional investment and, in all likelihood, competitive encounters with companies that have grown to dominate narrow slices of the business.

Two years ago, with industry conditions strong and financial markets bubbling, the challenges might well have seemed trivial. Two weeks ago, though, they were insurmountable. So, rather than move forward, Media Port’s parents pulled the plug.

That’s too bad. The process will assuredly become automated eventually, which will lead to cost savings and profit-margin enhancement. Automated processing will bring us closer to the inevitable day when big-time media deals are transacted over the Internet rather than over lunch.

At this stage, Media Port gets a failing grade, or at best an “incomplete,” but it should still get the first-ever cat-herding merit badge for bringing the big players to the same table at the same time, and having them agree on something, put up the money and get a project under way.