One thing missing from The New York Times’ trends to watch for in 2008 was any mention of buying and selling TV advertising inventory through an online auction platform. Has that concept come and gone?
I think not, and here’s why. While most TV stations can show single-digit percentages of revenue coming from the “other” category (which includes Internet, tower rental income, copyright royalties, production revenue, and a few other nonspot items), commercials are our cash cow. That’s why so much attention is paid to the Nielsen ratings.
In most instances, when a program’s ratings decline, so does its revenue. Higher demand coupled with limited availability can offset such an event, as we’re seeing in markets that have made the switch to Local People Meters. Nonetheless, it’s usually all about the ratings, and monetizing those rating points is our daily marching order over here in the Sales Department.
But what happens when the mechanics behind the most popular and successful form of advertising on the Internet--paid search--inevitably makes its way to our industry? Borrell Associates expects a 48 percent increase in local online ad spending this year, bringing it to $12.6 billion in the United States.
©ISTOCK/FRANCK BOSTON “Driving most of the growth is the popularity of local search and online video advertising,” the company’s most recent report stated.
PAID SEARCH
Your clients know it by its brand names: AdSense and AdWords from Google; Yahoo Search Marketing; MSN AdCenter. They’re obviously spending more and more of their ad budgets on it, and we need to know why. One of the reasons is the simplicity of it all. If you’ve never personally set up an online keyword buy, now would be a good time to try it. You’ll instantly discover what your clients are raving about.
The auction concept is not a new one. In fact, a lot of attention was focused last year on eBay’s e-Media Exchange. In that example, eBay’s program was a Webbased application for so-called reverse auctions. Instead of posting a time slot and having potential advertisers bid up the price, advertisers (normally the media buyers) could instead post their specifications for upcoming spots, and those who own the airtime (stations, studios and media holding companies) would bid for each of those opportunities.
By turning the traditional model on its head, eBay and its partners hoped to not only make the entire process of media placement faster and more efficient, but also to help level the playing field between the large advertisers and their smaller competitors for TV ad time, according to Bill Gerba of www.wirespring.com.
The problem with the eBay concept was the reluctance of the majority of the nation’s airtime owners to participate. Last April, Cable Advertising Bureau President and CEO Sean Cunningham said in a statement that the system had several problems. “Throughout our review, it became apparent that the Media Exchange was too narrow an application, had clear connectivity issues related to cable’s emerging end-to-end e-business platforms, and lacked the provisions necessary for capturing critical strategic and idea-driven intelligence during a buy,” he said.
INFOMMERCIALS FIRST
Nonetheless, I believe that an auction- based system will prevail at some point in time in our industry. Like most initiatives, it will start small and grow as all parties achieve a certain comfort level. I think we’ll see it first with avails for 30-minute infomercials.
Competition for those timeslots is not necessarily ratings-driven; lead-in programming plays more of a role when it comes to pricing and desirability. Many local stations already employ an “auction-based” system for their infomercial time slots, albeit a human one. Wouldn’t a computerized auction system make some sense? In radio and online, such platforms already exist.
Bid4spots.com has a system for selling last-minute avails that includes prepayment to participating radio stations, with a non-preemption clause attached to those sales. Stations that fail to comply with that policy are suspended for one month.
Online, ADSDAQ offers page-level contextual display ads (not just text) based on more than 350 categories. It’s all about efficiency. If users of the most popular online advertising systems could only use just one word to describe why they’re happy, I’m certain that would be the word. “Efficiency.”
Online auctions deliver it, and savvy TV stations will find a way to implement it. That’s my prediction for 2008.
Jeffrey Ulrich is a local sales manager at WGCL in Atlanta. His opinions are his own and do not necessarily reflect the position of Meredith Corp. He can be reached at hidefjeff@gmail.com.
