September 2006 - Marketing Methods

Ready to Buy TV Time on eBay?

By Peter Koeppel

Nine major advertisers have banded together to create e-Media Exchange, which will be an automated auction exchange, where advertisers will be able to buy broadcast TV, cable, radio and print ads. The initial focus will be on national TV buys. The pilot program for this “NASDAQ-like” concept will be tested early next year. The marketers that formed this exchange include advertising heavy weights, such as Wal-Mart, Home Depot, Hewlett-Packard and Toyota, among others. They have put up $50 million to fund the exchange and they are looking for other advertisers that want to participate.

Advertisers formed the e-Media Exchange because they have become frustrated with the way TV networks control the release of advertising inventory. They also believe that the current pricing system is not based on demand, rather on what advertisers paid in the past, according to an August 4 article in the Wall Street Journal. The advertisers have said that the exchange will be a supplement to the current upfront market and is not intended to replace the current system of media buying. However, the TV networks have expressed their opposition to this exchange and are determined to fight it. One of the reasons cited for moving ahead with the project is to counter Google’s expansion into selling traditional media such as radio and magazine space, according to the WSJ.

The system should not pose a threat to media buying firms, since the proliferation of new types of digital media makes it more important than ever to have a media expert evaluate, negotiate and buy the best media for their clients’ advertising campaigns. However, some of the largest media buying firms on Madison Avenue are also leery of an auction system that “puts everyone on an even footing,” because it would take away the leverage of advertisers that spend hundreds of millions of dollars a year, according to the WSJ. The advertisers and agencies involved in the project feel that the program would initially be a source for buying inventory on smaller cable networks and lower demand overnight TV advertising. The WSJ also reports that the group has had preliminary discussions with the Discovery networks and intends to talk with other networks.

It seems to me that the development of this type of exchange is long overdue. In my opinion, it will provide advertisers and media buyers with more control over media pricing and inventory. It will also allow advertisers and agencies to purchase media more rapidly, without the need for long rounds of negotiations. This is good news for DRTV advertisers that have seen media rates escalate rapidly over the last several years, which has made it harder for shows to pay out. The type of inventory the exchange will be selling should be attractive to DRTV advertisers. Stay tuned for more news about this exciting new development in the media buying process.

Peter Koeppel is president of Koeppel Direct Inc., a full service media buying agency based in Dallas. He can be reached at (972) 732-6110, or via e-mail at [email protected].


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