eBay announced Tuesday that it was ready to begin auctioning advertising airtime through the eBay Media Marketplace for Radio. The service, which is powered in partnership with Bid4Spots (which has been hosting radio airtime auctions since 2005) will provide an open access market for buying advertising slots on 2,300 US Radio Stations.
A similar effort to create a marketplace for cable television ads ran into a wall of resistance from cable television channels and the Cable TV Advertising Bureau in April. That’s not the case, so far, with radio. The hammer will fall today, in a positive way, when the service goes live. All of the major radio operators will be part of the market including Clear Channel, the nation’s largest radio operator.
Stations in all of the top 300 markets nationwide will be represented and the auction marketplace will include access to ad inventory for both conventional over-air radio (terrestrial but not satellite) and Internet radio stations. Available inventory will be chosen by the individual radio stations, and will likely include prime time radio inventory.
The auction marketplace will put eBay head to head against Google which is also trying to leverage the skills built in its online business for the sale of other forms of advertising.
With radio, even though Google is also working with some of the larger station-owning companies, I’d give eBay the early advantage provided they are successful in delivering a quality platform.
Auctions are a natural fit in many ways to sell advertising for radio. They bring dynamic pricing, giving the marketplace more control in determining value and they bring potential for marketplace efficiency (both in ease of transacting, the ability to move difficult inventory and pricing efficiency) in a market that is oftentimes otherwise fragmented. (Right Media, now owned by Yahoo has had success using an auction-like exchange for Internet advertising.) The biggest challenge with advertising auctions is that they may, in fact, bring too much efficiency.
Quoting from an earlier article here on Metue: “[There is often a strategic failure in exchange based marketplaces]: all sides (buyer, seller and exchange provider) need to derive defensible, consistent value in the exchange. And efficiency alone, simply making a transaction easier, doesn’t guarantee a good value-proposition for all parties. In fact, efficiency can be disadvantage to sellers if it risks commoditizing their product, or empowers their competitors by making it easier for all to sell and compete directly. Finding an acceptable balance of efficiency and opportunity that meets the interests of both buyers and sellers is not as easy as just creating a forum for sale.”
Unlike with Cable television (which eBay is still working to figure out), they seem to have a good starting balance in radio. By targeting last-minute ad buyers they are less likely to cause the kind of price efficiency that could disenfranchise sellers by putting them on an equal platform with competitors. Also, the accessible nature of the exchange will make it easier for new ad buyers to get into the marketplace; something radio ad sellers will likely welcome.
It’ll be interesting to see how the usage numbers and transaction data for the auction marketplace look six months from now.