Cable Operators

Mixed Forecast for Online Auctions

4/06/2007 8:07 PM Eastern

As eBay's Internet-based TV ad-auction venture hit massive turbulence, another from Google pulled onto the runway.

The Cabletelevision Advertising Bureau last week abruptly pulled out of eBay's online marketplace for buying advertising slots on cable networks, dealing a critical blow to the project before it got off the ground. The CAB's about-face came just days after Google announced a deal with EchoStar Communications to sell a portion of the ad inventory on Dish Network's 125 national channels in an auction format.

After several members of the consortium did a “deep dive” on eBay's Media Marketplace exchange for the past month, CAB CEO Sean Cunningham said, they concluded that the system would not provide the capabilities CAB needed.

Snapshot: TV Ad Revenues
Cable saw ad sales increase in the fourth quarter:
Q4 2006 Share Q4 2005 Share
Broadcast$6.54 billion52.6%$6.65 billion54.0%
Cable$4.82 billion38.8%$4.50 billion36.5%
Syndication$1.06 billion8.5%$1.15 billion9.3%
Source: CAB analysis of TNS data

“We found an extremely narrow tool that looked like it was automating a very small part of the process and didn't have the ability to capture 80% to 90% of the reasons why ads get sold,” Cunningham said.

For example, he said, the eBay system provided only a comment field for communicating why an advertiser's brand would be relevant to a particular audience. “It's contributed to our belief that eBay was not going to get it right,” Cunningham said.

EBay was “quite surprised and disappointed by the CAB's announcement,” said vice president of communications Brad Williams. Nevertheless, he said, eBay is “moving forward” with the Media Marketplace and that the company expects to deal with several large cable networks individually. Williams would not identify the networks, but said they are “top-10 cable networks in the U.S.”

“We were dealing with large cable networks before the CAB became involved three months ago,” he said.

The eBay system has been supported by several major media-buying agencies and 10 big-name clients — including Home Depot, Toyota, Microsoft, Wal-Mart Stores and Lexus — who had said they were willing to commit $50 million to the project.

Meanwhile, Google marked its biggest incursion into the TV-advertising business with the Dish deal. EchoStar executive vice president of commercial and business services Mike Kelly said a “small percentage” of Dish's total ad inventory will be resold by Google. Google and EchoStar did not disclose financial terms of their agreement.

The Google system — scheduled to begin trials in May — will sell ad space in an auction format only on cable networks, including ESPN, CNN, Discovery Channel, Lifetime, Nickelodeon and Disney Channel. No national broadcast channels or local affiliates are part of the initial trial.

The companies said Google will sell spots for all day parts on all 125 networks and all tiers, but they didn't name specific programming that would be in the mix. At first, the system will be by invitation only, limited to an undisclosed number of advertisers. Google TV ads director Michael Steib said Intel, E-Trade and 1-800-Flowers will be among the charter advertisers, and participating ad agencies include OMD Worldwide and Publicis.

What does Google bring to the party? Primarily, Google's TV ad system is designed to provide detailed viewer statistics to advertisers, said Steib.

With EchoStar, Google will compile viewing statistics from several million of the set-tops used by Dish's 13.1 million households. (Metrics from certain older Dish set-tops cannot be retrieved.) The viewing statistics, extrapolated across the entire Dish footprint, can be analyzed by program, network, time of day and other variables.

Google said it has approached several large MSOs about similar arrangements. But some TV ad executives doubted Google would find traction with cable.

“It's our belief that the industry will require third-party objectivity in terms of the audience measurement,” TNS Media Research chief operating officer George Shababb said.

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