Wal-Mart and other top advertisers are proposing an auction marketpace for TV advertising. This has big implications on many levels: It is another harbinger of the death of TV’s upfront, which was built on old business models of scarcity; now scarcity is dead as there is ever more content, more distribution, more competition. It is also another indication of the commodification of media; if you’re just broadcast, you’re just eyeballs… but (and here’s our opportunity) if you have real relationships with people you have more value. It is also an indication of competition with Google, which has been threatening to turn all ad purchasing into a Google auction; note that this project involves eBay. And it shows me this could create an infrastructure for negotiating advertising buys that could be used by the open ad marketplace for citizens media I proposed in Ad Age this week. On the Wal-Mart proposal, Ad Age reports:
A group of marketers led by Wal-Mart’s Julie Roehm today put out the call for advertisers to contribute $50 million for a test of an online auction system to buy and sell TV advertising.
The initiative is being championed by an ad-hoc group of 10 marketers including Wal-Mart, Hewlett-Packard Co., Masterfoods, Microsoft Corp., Philips and Toyota Motor Sales USA’s Lexus.
“We can be the driver of change” to bring more transparency and efficiency to media buying, said Ms. Roehm, senior VP-marketing communications at Wal-Mart Stores USA.
The proposal is a more contained version of a big idea that Ms. Roehm has been pushing for nearly two years. In a June 2004 Viewpoint essay in Ad Age, Ms. Roehm — then a marketing executive at DaimlerChrysler’s Chrysler Group — proposed replacing the TV upfront market with a Nasdaq-like online trading system for commercials….
At the ANA conference today, eBay presented an online trading platform that could be used. The “Media Marketplace” home page would allow an advertiser or agency to click on a desired network, age, gender and time; see the available inventory; see the time remaining in the auction; and then enter a bid. If successful, the buyer soon would get the message: “Congratulations! You are the Winning Bidder!”
The system could work in two ways: A forward auction, where buyers bid for available inventory; a reverse auction, where media sellers responded to a buyer’s request for proposals for, say, 20 gross rating points for men age 18-34.
Taking a small slice
Under eBay’s scheme, the trading system would be owned and controlled by the ad market; eBay would likely take a small slice of transactions as a fee. Media would decide how much of their inventory to offer on the system.