Online Ad Exchange Faces Logistical Hurdles

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The establishment of a pilot program to test the online buying and selling of advertising left those who sell commercial time on cable networks pondering logistical problems and questions about the overall value of the initiative.

The e-Media Exchange, which involves the online auction giant eBay Inc. and hopes to get off the ground early next year, would likely serve as a supplement to the scatter market, and would not have a direct impact on the upfront, cable network and advertising executives said.

“The idea is an advertiser would say, 'I need X number of GRPs [gross rating points] in September,’ ” said one advertising-agency executive familiar with the plan. “The seller would respond by indicating what it has available.”

Advertisers would state their media needs on the site and invite networks or other media to make their best offers.

EBAY ON BOARD

Online auction giant eBay will work with the task force to develop and manage the framework and technology for the project, details of which were first reported by The Wall Street Journal on Friday.

Also on Friday, the group launched a Web site (www.admarketpilot.com) to register interested parties for this “media marketplace.”

To date, Toyota Motor Sales USA, Wal-Mart Stores, Microsoft Corp., Hewlett-Packard and Home Depot are among about 10 companies that have signed up and said they are willing to commit $50 million to the collective project.

Ad agencies on board for the pilot test: Interpublic Group’s Magna Global, Omnicon Group’s PHD, Aegis Group’s Carat and Publicis Groupe’s ZenithOptimedia.

The group has been in contact with Discovery Networks U.S. Joe Abruzzese, the unit’s ad-sales president, was on vacation and could not be reached for comment Friday. A spokeswoman said only that Discovery “would evaluate if it’s a viable option.”

Turner Broadcasting System Inc. declined to comment. MTV Networks and Scripps Networks didn’t return phone calls by press time.

Meetings to set up the pilot are expected to take place after Labor Day at eBay. Supporters include the Association of National Advertisers and the American Association of Advertising Agencies.

Mike Donahue, executive vice president of the American Association of Advertising Agencies, said he believes the exchange could hold strong benefits for smaller cable networks.

“There are many cable networks out there with strong niches that buyers would probably do well to know more about, but they don’t have the time,” he noted. “By the same token, the networks probably don’t have the manpower to get to see all the agency people they need to.”

Cable network executives, though, expressed reservations about the pilot program.

AID TO SMALL NETS

“Maybe, there’s a place for it in moving inventory in difficult dayparts, or if an advertiser pulls out at the last minute,” said an executive at a top cable programmer. “This could help some of the digital networks sell time, but I just can’t imagine they’re going to get the broadcasters or the bigger cable networks to commit in any meaningful way.”

A veteran cable ad-sales executive who represents mid-rated networks said there would have to be a number of safeguards in place before any seller should consider participation.

“There has to be certain floors off rate cards that you can deal with and some leeway to pull inventory back if market conditions change,” he said.

Putting any leftover inventory in certain shows could backfire.

“What if I’ve booked an automaker for the A position and then via the exchange, another car comes into the same pod?” he asked. “My client’s not going to be happy seeing a competitor and finding out he may have gotten a better rate.”

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