By George Anderson
Retailers have used the online auction process to drive down costs of all types of products they purchase for internal use as well as sale to consumers, so perhaps it should come as little surprise that Julie Roehm, senior vice president - marketing communications for Wal-Mart, is calling for a similar type of system to be tested for purchasing and selling television advertising time.
According to a report by Ad Age, Ms. Roehm is asking advertisers to contribute to a $50 million fund to test the concept. Among the consumer marketers likely to participate in the test are Hewlett-Packard, Masterfoods, Microsoft, Philips and Lexus.
Ms. Roehm is looking to get a large number of advertisers to participate in the test. "A hundred advertisers would be great," she said. "Maybe it's 200."
The proposal by Ms. Roehm is not new. She first began pushing for it two years ago when she was a marketing executive at Chrysler.
Advertisers are looking for more transparency when it comes to media buys, especially in the area of upfront purchases. The Association of National Advertisers (ANA) is playing the role of facilitator in moving the proposed auction test forward.
There is interest among online auction sites, most notably eBay, to participate in the advertisers' test.
The online auction giant proposed a system that would allow advertisers and/or their agencies to look at inventories of available commercial slots based on network, timeframe or a variety of audience demographic attributes.
Auctions could proceed in two ways: either as a forward auction where bids are made by advertisers or their agencies on available inventory; or a reverse-auction system where networks and other media sellers could respond to bids by advertisers or their agencies based on criteria detailed by the buyer.
No decision has been made on the technology partner in the test, although Ms. Roehm was impressed with eBay's presentation calling it "a really good solution."
Not every large advertiser is convinced that auctions are the way to go. Many of the largest media buyers are happy with their ability to work out low prices through the current system.
The major television networks are also not looking to promote online auctions as a means to make media purchases. None of the major networks participated in the ANA's panel discussion of the topic.
Moderator's Comment: What are your thoughts on an online auction system for purchasing television and other media? Will a system of forward or reverse auctions benefit larger media buyers and hurt smaller marketers? How well have online auctions worked for retailers and suppliers for other products and services?
It should be noted that while Julie Roehm is promoting the test of an online auction system, which suggests her company would participate, Wal-Mart has not officially pledged to participate in the project. - George Anderson - Moderator