Cable TV opts Out EBay TV Test

[MediaSalesPro]

What do you make of this?

Cable Opts Out of EBay TV Ad Tests
CAB Members Upset They Didn't Have More Say in System's Design
By Abbey Klaassen

Published: April 05, 2007

NEW YORK (AdAge.com) -- Less than a week after Google launched its auction-based TV ad sales system through Echostar, an eBay initiative backed by several large TV advertisers has suffered a blow from the cable industry as the Cabletelevision Advertising Bureau withdrew its participation in any trials of the electronic auction system for buying TV ad time.
According to the CAB, there were multiple impediments to the eBay electronic auction system working.


Initially supportive
The CAB had initially rallied its members to become involved: In October the group sent a letter to numerous ad-sales presidents recommending they "consider their possible inclusion into this test."

But despite their early interest, it's apparent TV sellers were upset they haven't had more of a say in the system's design. Sean Cunningham, CEO of the CAB, said a small group of senior cable sales executives from some of the larger cable networks got a first look at the electronic exchange system Jan. 25. The peek raised more questions than answers and the networks were under the impression they would get another look at the system soon and begin testing it.

They were then taken by surprise when eBay presented the system at the 4A's Media Conference in late February. It was off-putting for many of the members that attended because the system include several unexpected aspects, Mr. Cunningham said. "We had been fully collaborative testing partners with them at this point, so it was news to them that this product was ready and that bugs had been worked out," he said.

'Minimal ability'
According to the CAB, there were multiple impediments to the system working. First, said Mr. Cunningham, eBay designing the system was characterized as "outsiders trying to make an insider's product." He also said the system had "minimal ability to capture the vast majority of the reasons, rationale, insights and nuances of how all buys are made."

One cable-network executive involved with the CAB demo said the system was "premature" for this year's marketplace and would need to have enough participants to function as an auction. "You'd have to have enough critical mass of advertisers and also competitive networks," the executive said.

And while the system had been designed with guidance from several agency executives, not all were on board.

"There's no question we want something -- anything -- if it's going to improve the efficiency of the process we're using. I don't think what I've been exposed to is the answer," Starcom CEO John Muszynski said at the Association of National Advertisers TV Forum in New York last month.

Marketers disappointed
The steering committee of the E-Media Exchange, which includes marketers such as Microsoft, Home Depot, Lexus and Intel, issued a statement expressing disappointment with the cable industry's decision: "We selected national cable for the pilot because they have a history of embracing new industry initiatives. We are surprised at the CAB's unwillingness to continue the dialog on this topic.

"It is evident," the statement went on, "that this is a very active marketplace and the idea of media exchanges is gaining momentum. We are still bullish about the system that has been produced. ... We will continue to pursue cable networks and are confident that the eMedia exchange will have traction with cable and other media."

EBay said the system will go forward despite the CAB decision. "We were quite surprised and disappointed with the CAB decision," said Brad Williams, VP-communications for eBay. "The media marketplace will go forward."

He said the steering committee and eBay had intended to initiate a test of its technology for selling advertising online at a few cable networks, but in the early test no dollars would have been exchanged.

He said that while that test will now be delayed, both eBay and the steering committee continue to see strong interest in the electronic system.

"We view this as a speed bump. The steering committee is bigger than cable TV," he said.

~ ~ ~
Contributing: Andrew Hampp and Ira Teinowitz

[db7]

The future belongs to web-based emarketplaces connecting buyers and sellers directly.
The days of intermediaries, companies that add cost (but no value) to the process of distributing goods and services, are numbered. As soon as the programs can be written and the relationships can be established, emarketplaces will replace most distributors. I believe this will be true from heavy industrial wholesalers to intellectual creative agencies. Every industry that is currently dependent upon profit-robbing 3rd party supply chains will eventually move to direct supply utilizing emarketplaces.

If it isn't ebay now, it will be someone else next year, or the year after that.

[MediaSalesPro]

Db7: How can newspaper and television stations practically take your prediction and become a solution for advertisers and distributors or manufacturers?

[db7]

Media Sales Pro asked a good question. Two recent articles from the AAF Smartbrief set the stage for an answer. Please see the excerpts below.

Published: April 12, 2007
NEW YORK (AdAge.com) -- Office supply-giant Staples has elected to keep its $128 million media-buying account with WPP Group's MediaCom, according to people familiar with the business. Interpublic Group of Cos.' Universal McCann and Publicis Groupe's Zenith Media also participated in the review.

Published: April 13, 2007
Yahoo! Inc. and a consortium of a dozen companies representing some 250 daily newspapers could announce as soon as Monday plans to take the next step in their old-new media partnership of sharing ads and editorial content, sources said. The Yahoo-newspaper pact, which was created in November by seven news companies as a vehicle to sell classified ads via Yahoo's HotJobs.com, has gained new clout with the reported addition of McClatchy, the nation's second largest newspaper chain as measured by circulation. Los Angeles Times (free registration) (4/13)

The first article describes today's paradigm. Large Media Buying Companies (MBC) are middlemen who 1) squeeze media for better rates and 2) charge fees for placing ads. The MBCs have grown in power and reduced in number. Consolidations and mergers produced giant MBCs. Advertisers willingly pay the MBC's increasing fees instead of developing infrastructure to manage the complexities of national ad buying. On the other end of the supply channel, Media must continue to cut rates to stay in the game. IF there were a profitable and effective alternative, both Media and Advertisers would be better off without the profit-robbing MBC middlemen.

Enter the new paradigm, described in the second article. Yahoo is creating a web-based emarketplace to link Media directly to Advertisers. Since the infrastructure (marketing communications, data management, billing, etc.) is automated, the emarketplace can provide the middleman function at a fraction of the cost of the traditional brick and mortar MBC. There will be no sales force, no entertaining, no Billing Department personnel, and no paper invoices going through expensive snail mail.

Eventually, instead Advertisers will log onto the emarketplace web site, and click the markets, the ad schedules and the ad copy they desire. The System automatically will notify the Media of the order, charge the Advertiser and pay the Media. The Media will run the ads, electronically verify System that the ads ran as ordered, or notify it of any adjustments. The System keeps Advertisers and Media appraised of the progress of the Ad Schedules.

Yahoo obviously isn't there yet. This is a vision years away, BUT the first System IN will WIN. This is the BIG picture, world wide in scope. I also see local Media changing to eliminate middlemen and get much closer to their Advertiser partners. More on that later.

What do you think?

[db7]

For a couple of million in start up cash, I know the guys who could build the first system.

[db7]

The web-based marketplace for local newspaper ad space is here now. See article on Google
http://money.cnn.com/2007/07/18/tech...ion=2007071806

It is not the finished product, however.

As Google and Yahoo battle for marketshare in this new "Ebay-style" bidding-for-ad-space environment, expect some new player to be preparing a premium option. That new player will enter the market in 2008 or 2009 and will offer all the services and none of the bidding aspects. Advertisers from anywhere will be able to purchase local ads with guaranteed dates. Ease of ordering and paying (one consolidating vendor vs hundreds of local papers) will make local newspapers a very affordable, effective print media option once again.

[Ad Chatter]

Agreed db7. This is coming and I think it will be interesting to see the newspaper industry's response. Are we going to embrace it or are we going to come up with some odd reason(s) for not wanting to take advertisers' money?

[db7]

I believe there are several reasons for local newspaper publishers to take advantage of this new sales opportunity.

First, it's no secret that local ROP ad revenue is declining for most local newspapers. This service could bring fresh advertisers to those papers.

Second, it is in the best interests of ALL local newspapers for this experiment to succeed. Local papers command a huge pool of potential customers IF someone can CONSOLIDATE them. These national ad-space marketplaces are acting to collect hundreds of diverse, mini-markets into a single, convenient buy. Google and Yahoo are making it simple for national advertisers to buy local newspapers again. It makes sense for any national firm to look seriously at this new opportunity to reach loyal, local newspaper readers. So, the success of this venture depends upon the rapid and accurate uptake of the service by the local newspapers. If they cooperate fully, there will be plenty of new revenue to reward their efforts. If they balk at this opportunity, it may be years before this chance comes again.