January 18, 2007 4:06 AM PST
Marrying old-media ads with Internet selling
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Not everyone welcomes Google's entrance in the offline ad market. Many advertising agencies and some media companies are worried that Google will end up dominating the industry and controlling prices, like it dominates the search engine advertising market.
However, Google "doesn't want to create any anxiety," Holden said. "We view ourselves as complementary to what publishers are doing as a whole, and agencies and ad buyers. We're channel agnostic."
The eBay way
Apparently, advertisers are not as worried about eBay. A group spearheaded by Microsoft, Hewlett-Packard, Intel, Home Depot, Toyota Motor and some ad agencies, including Carat Group, chose eBay over Google when seeking a technology partner to create an online marketplace targeting cable TV stations, said Patty Kerr, a spokeswoman for the group.
eBay is on track to implement the eMedia Exchange pilot in the second quarter, she said. The exchange, which will allow cable stations to confidentially bid on advertising over the Internet, is not designed to be a replacement for traditional media buying, she said.
DeWitt Media Strategies
Yahoo, meanwhile, has no immediate plans to leverage its online ad network for the sale of offline advertising. Under a partnership with nine newspaper publishers representing more than 225 newspapers in the U.S., Yahoo will power the ad networks for the papers, as well as power their search and map functions, said Eric van Miltenburg, general manager of Yahoo's newspaper consortium. "The deal does not contemplate Yahoo being the ad network for their print ads," he said. Although, "there is nothing that would preclude us from moving in that direction."
Google faces challenges in the offline world that it didn't face in the online world, particularly when it comes to broadcast. Many station managers won't want to cede any control over their pricing or scheduling, entrenched sales representatives will be protective of their turf, and some ad agencies will see an online marketplace as a threat to their existence, experts said.
"The networks won't play along for the foreseeable future. They want to maintain control over their inventory," said Gene DeWitt, president of media buyer and consultancy DeWitt Media Strategies. "I can't imagine TV networks turning inventory over to this commoditized process before three to five years."
Google's biggest hurdle is cultural, said Did-It's Wise. "Publishers are used to reserving inventory and giving discounts," he said. "Madison Avenue needs to evolve."
However, agencies shouldn't worry about being sidelined, said Greg Sterling, principal analyst at Sterling Market Intelligence. "That won't happen because of the need for creative (skills to create the ads) and because you need sophistication and human expertise to really execute an effective campaign," he said.
Several other companies are using Web-based technologies to enable the buying and selling of radio and TV ads. Softwave Media Exchange is a platform for buying ads on radio and television stations. The company works with more than 1,600 radio stations in the top U.S. markets and all the major cable networks covering 50 of 200 cable markets.
Bid4Spots runs a reverse auction every week in which advertisers set their maximum prices for time slots and radio stations bid on them. The company has 2,300 stations in the largest U.S. markets, said Chief Executive Dave Newmark. At the end of January, Bid4Spots will also enable advertisers to buy ad time on Internet podcasts.
Meanwhile, Spot Runner is an ad agency that offers an online system for buying television ads and a low-cost way to create custom advertisements using templates from its library of ad samples. Where a traditional 30-second spot costs close to $400,000 on average, Spot Runner helps create ads for less than $500. The company's investors include ad agency holding companies WPP and Interpublic Group and media players CBS and Lachlan Murdoch.
Despite the resistance old-world media has to the new Internet players, resistance is futile, said Boggs of Rainmakers International, whose customers have bought advertisements via Google, Software Media Exchange and Bid4Spots.
"Our thought process is it's capitalism and survival of the fittest, at the end of the day," he said. "Whatever is good for the client and for the medium, whatever helps to sell more radio ads, is probably good for the industry."
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