A New Platform for Media Transactions

In a move with far-reaching implications for the advertising business, three
of the world’s ad giants are teaming up to create a new company dedicated to
establishing an electronic platform connecting media buyers and sellers via
common protocols.

The Interpublic Group of Companies Inc. , Omnicom Group Inc.
and WPP Group plc — the world’s three largest ad agencies — said in a joint statement
that the new platform will be aimed at improving the complex flow of data and
information related to transactions for media time and space.

The new platform will be designed to act as a service through which data and
information providers can be easily accessed, “replacing the fractured and
labor-intensive process in which media data is exchanged today,” the
companies said.

“Interpublic, Omnicom and WPP believe that technology presents a great
opportunity to create a platform from which the billions of dollars now spent
on media every week can be transacted much more effectively and cost
efficiently,” said Interpublic chairman John Dooner, Omnicom chairman John
Wren and WPP Group chief executive Sir Martin Sorrell in a joint statement.

Although it doesn’t have a name yet, the new company will be based in New
York City and headed by Michael Lotito, formerly president and chief
operating officer of Interpublic’s Initiative Media North America.

Web advertising “will be a component for sure,” Lotito told internetnews.com.
“However, the system we build will enable media transactions in every
medium,” including print, broadcast, and cable.

He said he expects the platform will be Internet-based, but that it has not
been decided yet.

“We are not building a media exchange — we will let the (advertising)
business run the way it does today, only using technology to make it more
efficient and faster,” Lotito said “So much of what we do will be building
common protocols, letting everyone use the same language. We don’t care if we
continue using ad banners or invent something new, it should fit into this

Asked about the challege of such an endeavor in an environment that changes
as rapidly as the Web, Lotito said with a chuckle: “Don’t think I’m not
suitably nervous.”

Interpublic, Omnicom and WPP said they expect to formally launch the new
company in the second quarter of this year. Also, other advertising/marketing
companies will be invited to join the venture.

Clearly it remains to be seen just exactly how much shrift is given to
interactive media — the formats and standards for which are constantly
changing. If they are given an important place in the new firm — built into
the platform from the start, for example — it will signal digital media’s
growing acceptance in the traditional advertising industry. If not, it will
indicate that interactive advertising still is not considered a critical part
of the media mix.

This is not the first time that players in the advertising industry have set
to work solving the problem of inefficiencies in the media buying process. A
host of start-ups has begun to build platforms designed to connect media
buyers and sellers, but this effort — given that it has the backing of the
major players in the industry — would seem to have a significantly better
chance of getting off the ground.

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