Marketing

Online Ad Market Nears

8/11/2006 8:00 PM Eastern

Buying and selling advertising on the Internet may be inevitable. But for now, it’s in the test stage.

The devil, experts say, will be in the details of how the tests are structured to protect “television’s greatest currency, our advertising inventory.”

“An electronic marketplace is way overdue,” said Tim Hanlon, senior vice president of Denuo, Publicis Group’s media futures consulting practice. Everything from oil futures to consumer travel is sold electronically, and ad buyers and sellers are still faxing one another, he noted.

That may be why there’s buzz around the partnership announced last week between Google Inc. and Viacom Inc. The search engine giant will place ad-supported video clips from MTV Networks at hundreds of Web sites.

EBay also raised eyebrows two weeks ago with its e-Media Exchange experiment, in which the online auctioneer will design a site where advertising inventory for multiple media can be bought and sold.

The current ad sales methodology has operated “in a bizzaro world that defies business logic,” Hanson said, because the sales are done in back rooms and most of the orders and record-keeping rely on that now old-school technology, the fax.

In the new online order, programmers may need to move their fare beyond their own walled gardens and place programming elsewhere, as will Viacom’s networks. And they may find it necessary to find partners like Google and eBay to help sell advertising into not just their online content, but their cable and satellite networks.

Hanson and other experts, such as Puneet Manchanda, associate professor of marketing at the University of Chicago’s Graduate School of Business, believe the online auction could benefit niche networks and unrated programming, such as high-definition networks.

“An 11 p.m. time slot in a Florida market might go unsold. This way, it might [sell],” said Manchanda.

Executives and experts said they didn’t expect the traditional ad sales upfronts to go away. The new selling methodologies, if they catch on, would just create a bifurcated market.

Big ratings-getters like the Super Bowl or Desperate Housewives and cable hits like Rescue Me will still justify buys, product placement and co-promotional opportunities from big marketers such as Coca-Cola and General Motors Co.

But other inventory, from niche networks, video on demand, high-definition radio, HDTV channels and other new media, would be placed in another bucket. “And that bucket is ever increasing,” Hanlon said.

Ann Bybee, former corporate manager for Toyota Motor Sales U.S.A.’s Lexus brand, said there are a lot of small cable programmers out there that “don’t see the light of day” as far as exposure to potential advertisers.

An auction scenario could showcase the demos they deliver, she said. Bybee is also a member of the e-Media Exchange, and Toyota is financially backing the test.

The Cabletelevision Advertising Bureau will have a lot of input in the design phase of an online auction, said CAB president and CEO Sean Cunningham. “The No. 1 thing: this is only a test,” he said. “We have some very serious questions. They’ll be trading our currency.”

In its collaboration with Google, MTVN will let Web site publishers showcase clips from shows such as Nickelodeon’s SpongeBob SquarePants and MTV: Music Television’s Laguna Beach. MTV will make money from ads sold into those clips.

Another revenue stream will come from Google’s AdSense network, which delivers ads to Web sites and blogs. In AdSense, buyers in bid on how much they will pay for clicks on their ads, which are tied to specific words or types of content.

One more revenue stream: MTVN shows are now available for purchase through Google Video, for $1.99 per episode.

September