Several major advertisers are teaming up with online auctioneer eBay Inc. to test an idea for selling television advertising in an electronic marketplace, the group announced Friday.
A group of marketers and advertising agencies wants to try what would be a vastly different way of selling TV ads, which are usually negotiated in closed-door deals between networks and advertisers.
The process has long been criticized as cumbersome and opaque, since the exact prices paid by different advertisers often isn’t known, meaning that some will wind up paying more than others.
“As you look at the existing media buying and selling process, there is a level of perceived inefficiency in the system,” says Bob Liodice, president of the Association of National Advertisers. “The marketers believe there may be a more transparent approach toward the buying and selling of advertising.”
The test is still at an early stage, and Liodice emphasized that it was not intended to replace the “upfront” advertising marketplace, or the annual ritual every spring when the vast majority of TV advertising is sold in advance of the fall season.
The advertisers participating in the test include Toyota Motor Corp., Wal-Mart Stores Inc., Microsoft Corp., Hewlett-Packard Co. and Home Depot Inc.
(MSNBC.com is a joint venture of Microsoft and NBC Universal News.)
In addition to the ANA, the pilot program is also being supported by the American Association of Advertising Agencies. The group wants to try out the test in the second quarter of next year.
It’s not yet clear how the marketplace experiment might work, but Liodice said the idea was to sell advertising much like stocks are traded on the Nasdaq Stock Market, with transparent prices for each item that are visible to all participants.
In a similar way, an electronic marketplace for advertising would match up buyers and sellers of ad spots electronically. Today, ads are often sold in complex deals, with discounting and other considerations taken into account based on the timing and amount of advertising being bought. Marketers with long-standing relationships with certain networks may also get better pricing than a new entrant to the market buying only a one-time ad.