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, 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, 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

Other competitors here include, which has been operating since
July 1999, and, which
recently re-launched its online advertising service after receiving an
$8.25 million investment. This week saw the introduction of MediaPost‘s, which acts as a
virtual introduction service between online publishers and advertisers.
Meanwhile, there are and, which focus
on TV and radio. And finally, there’s, 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. says it has more than 2,000 buyers
and tens of thousands of sellers. 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. 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., 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 “Media buyers have
only a certain amount of bandwidth to deal with people in person.”

Masarek of 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

odels. aims to be a one-stop-shop for online remnant
advertising, where media buyers can come, buy space, upload creative, see
reports, and make changes in campaigns. incorporates a wider range of media, and it also has developed
for a negotiating process that the company hopes mirrors the real world,
where pricing is different for different customers.

“Until you see models that address these points,” said’s
Mazarek, “you’re going to get slow adoption.”, as the name implies, mostly follows a bidding model. But it
also allows media buyers to submit their parameters, and have publishers
come to them with avails that fit their needs.

“That’s what totally makes the most sense for an agency,” said Brandon Rea,
national media director for Beyond Interactive. “I don’t
necessarily want to be bidding and waiting to see if we make it or not.” simply posts the public rates for different online
advertising opportunities, and serves as a middleman during a negotiating
process, taking five percent of the purchase price as its fee.

“It’s evolving,” said Adam Herman, marketing director at MediaPost. “Our
next idea is to launch into something else, maybe radio, print, magazines.”

As much as all of the new players are benefiting from the increased
attention, it’s clear that these exchanges won’t be the only place media
buyers and sellers go to transact business.

“We have traditionally used direct sales because there are a finite number
of customers,” said Lyn Chitow Oakes, executive vice president and general
manager of Engage Media, “and these
services just offer another channel.”

The big agencies, especially, have already established relationships and
rates, and have little need to go elsewhere. It’s the smaller advertisers,
like marketing managers at individual Web sites, that will probably find
the most utility in these online exchanges.

“It speeds up the process of doing things, and puts the little guys on par
with the bigger guys,” said immediabuy’s Herman. “I think something like
immediabuy and others are saying, ‘you can compete, you can be taken

Obviously, we’re just in the early stages of what online marketplaces can
offer the advertising industry. Some already allow for the digital transfer
of creative, and this will likely become a must-have feature as higher
bandwidth becomes more commonplace. We’ll probably see consolidation among
the players, or possibly greater specialization as companies try to find
their niche. The only thing that’s sure is that this sector is one to watch
in the coming months.

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