RealTime IT News

Online Ad Industry Exchange Activity Heats Up

While online exchanges spring up for everything from chemicals, to steel, to plastics, the business-to-business action in the advertising industry is intensifying, as established leaders expand their ambitions and new players introduce their own efforts to revolutionize media buying and selling.

"The marketplace has gone wild in the last six months," said Alan Masarek, chairman and chief executive officer of AdOutlet.com, an online marketplace for online, outdoor, print, radio, and television ads, "and the pace of growth is accelerating."

The best-known player in the business is AdAuction.com, which made its name selling remnant online avails and has recently branched out into out-of-home opportunities. The company last week brought aboard executives from the world of broadcasting, a precursor to their planned move into television, radio, and print.

"We believe we're going to be first to move forward in all categories," said Derek Mattsson, senior vice president of marketing at AdAuction.com.

Other competitors here include AdOutlet.com, which has been operating since July 1999, and AdFlight.com, which recently re-launched its online advertising service after receiving an $8.25 million investment. This week saw the introduction of MediaPost's immediabuy.com, which acts as a virtual introduction service between online publishers and advertisers. Meanwhile, there are BuyMedia.com and Broadcastspots.com, which focus on TV and radio. And finally, there's MediaPassage.com, which does newspaper and magazine avails.

While these exchanges have a reputation for being bargain-basement sites that drive down the prices of media, many among the current crop of executives are looking to change that view. Remnant media still accounts for a significant amount of what's sold on these sites, but the number and quality of avails does seem to be steadily increasing.

The increase in the number of folks registered on these exchanges shows a pattern of dynamic growth. AdFlight.com says it has more than 2,000 buyers and tens of thousands of sellers. AdAuction.com says it has grown to 10,000 registered users, as compared to only 4,000 a year ago. The number of sellers of online media on the site has grown to 350 this year, up from 125 last year. AdOutlet.com says it has 6,500 registered media buyers now. It launched in June of 1999 with 30 media companies selling $1 million in inventory, and now has more than 300 sellers, with $30 million in inventory. immediabuy.com, although it just launched, says its phones are ringing off the hook with companies eager to be listed as sellers.

The proliferation of players and the explosive growth is a testament to their increasingly importance, as media opportunities multiply with the growth of the Internet.

"The fragmentation that exists, it's so overwhelming," said Chad Roffers, vice president of online advertising at AdAuction.com. "Media buyers have only a certain amount of bandwidth to deal with people in person."

Masarek of AdOutlet.com agrees, saying, "Media transacting is greatly strained right now."

Another reason for the ascendance of online marketplaces is the fact that media buyers are expected to turn on a dime when making changes in a campaign, and online publishers often need to make last-minute sells when traffic increases. When you're expected to operate on Internet time, it seems, you're more likely to turn to the Internet.

One factor that will determine how big these players grow is their various business m