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Friday, August 04, 2006

eBay TV Won't Work


Several large advertisers are putting together a program that would allow them to produce an auction system for buying national TV advertising time. The program is called e-Media Exchange.

In theory, the move is brilliant. It would allow advertisers to purchase time through an auction system instead of through direct negotiations with networks. One smal cable network, the Discover Channel, may test the system. Wal-Mart, Home Depot, Hewlett-Packard, and Lexus are amoung the companies that may participlate in the experiment.

The system is similar, in some ways, to the auction of keywords at Google. That process in ongoing throughout the year and operates in real-time. The TV ad auction would function by buying advertising based on demand for programming instead of on rates set by the networks and then negotiated by companies who want time on specific programs or against specific demographics. Much of the TV ad inventory is sold in the months before each TV season starts, in a system called "up front" buying.

The flaw in the system is probably the strength that the largest TV and cable networks have to resist a new method for buying advertising. The largest advertisers cannot afford to hold out while the new system comes online. The auction program may be dead on arrival as huge purchases like GM and Budweiser continue the traditional system of buying the programs they want at the times they want. This kind of targeting is probably worth a premium of some level. And, the networks are happy to oblige them.

Douglas A. McIntyre can be reached at He does not own securities in comanies that he writes about.

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