TV Advertising Marketplace Gains Momentum

Yesterday’s announcement of plans for a Nasdaq-like trading system to buy and sell broadcast media is an interesting concept that’s time has likely arrived. To date, the world of media buying has not played by the rules of transparency that reins in, say, the securities industry. However, even as Association of National Advertisers' National Television Advertising Committee (ANA) is in discussions with vendors like eBay and Google about managing the exchange’s infrastructure, there are already several vendors taking an exchange-like approach to the buying and selling of media in the online world.

Of these, Manhattan-based Right Media is most prominent and has come up with a model that allows them to sell software to networks and publishers who are interested in aggregating their inventory, while also taking a cut of each buy that is made through their exchange. Other vendors like Adbrite, Hyperbidder and Experclick have similar models. Experclick uses their SpotPrice real-time auction and pricing platform to break the fixed-price media sales model. Despite the inevitable naysayers, such an approach, whether for online or offline media, benefits both buyer and seller. Buyers only pay what they feel media is worth and sellers can theoretically reduce ‘house’ ads that generate no revenue. In the hyper-segmented world of the Internet, such a strategy works because it frees sellers from the burden of setting arbitrary prices, which, in reality, buyers are much more qualified to define. After all, how can a web publisher ever truly know what inventory on the Birdwatchers page in the Outdoor section of their site is worth?

Historically, television hasn’t faced these segmentation issues and the price for a 30-second spot on cable or a major network was something that you could pretty much take to the bank. However, in an era of time shifting, place shifting, and a deluge of channels and alternative media outlets, the value of a TV spot is very much in flux. The proposed ANA trading system, which is now slated to launch next fall with a test budget of $50 million, should help set objective value for TV media based on something both buyers and sellers can agree on: an open and free marketplace.