Ad inventory systems companies surveyed

How are the different online radio and television transactional providers making dollars for stations? With the product offering changing rapidly with new functionalities and competition in the space, we thought it was time to take a snapshot of some of the competitors in the space. Here are three players aiming at station inventory that may or may not compete with Google's Ad Sense for audio.

The participants:
Dave Newmark, Bid4Spots CEO
Doug Perlson, TargetSpot CEO
Jeff Simmons, Better Buy Media CEO

What is different about how your company buys radio, places the business and pays the stations? How are you different than the others?

Newmark: The first answer to this question is to say what we are not:  we are not a process to purchase airtime on specific stations.  Ours is an auction where the advertiser puts up their money and let's the most cost-efficient stations win it for last-minute inventory purchases.  We do not transact for inventory beyond the upcoming broadcast week.

Bid4Spots is a live, reverse auction that takes place every week.  The best way to describe it is to outline the process that take place each week:

Every Wednesday, Noon Pacific Time:  This is the deadline for advertisers to post three things: Clear funds in advance; Final commercial in mp3 format;

All auction criteria filled out in our website, including: All markets they wish to invite; All formats they wish to invite; CPM ceiling; Dayparts in which spots are allowed to run; Total budget; and Minimum/maximum spots per daypart they will buy.

The next morning, Thursday, approximately 2,500 stations compete through the computer for all the advertisers' money.  By 12:00 noon PT, the winners are determined and the computer sends them an email indicating which stations have won and how much.  Stations use this information to create orders and it goes through their system like any other regular order. The broadcast week happens, we verify that the spots ran and issue immediate payment to the stations.

Some key differences between Bid4Spots and typical DR/remnant advertising: Our spots are not pre-emptable; Spots must run in the dayparts requested; Rates are not disclosed to other stations or advertisers, ever; Stations decide the pricing, not the advertisers.

Perlson: TargetSpot offers a new opportunity for radio stations to generate revenue from their online streaming inventory. TargetSpot's unique ad insertion technology delivers ads into the user's media player, in real time, rather than in the source of the stream. This enables stations to sell targeted (ie, geographically by user zip code) advertisements on a CPM (cost-per-thousand impressions) basis. Because TargetSpot-enabled stations participate in a broader ad network, stations also monetize inventory through run-of-network, format and geographically targeted buys. Advertising revenue is split between TargetSpot and the station. 

And, in the case of smaller advertisers, TargetSpot's unique web-based ad platform enables advertisers to buy inventory on a self-service basis, thereby connecting stations to a vast new range of advertisers. Larger scale advertisers and agencies can opt to work with a TargetSpot campaign specialist for full-service.

Simmons: With BetterBuyMedia.com, our structure allows Buyers to purchase flights in the normal way rather than purchasing remnant advertising only. BetterBuyMedia absolutely protects the confidentiality of the Buyer's budget and the Seller's pricing. We only reveal to the Buyer total dollars spent along with an itemization of the inventory purchased.

Business is placed with the station through an order confirmation process that allows stations complete control of their inventory and pricing. Orders are confirmed back to the Buyer upon confirmation from the station.

BetterBuyMedia makes payment to the station within 10 days of receipt of affidavit of performance from an escrow account already paid into by the Buyer. Money is withheld for inventory not cleared as scheduled.

BetterBuyMedia has been established with a structure similar to Priceline.com. The principal differences are that we allow Buyers to purchase not only remnant advertising but flighted advertising as well and we absolutely protect the confidentiality of both the Buyers budget and the Sellers pricing.

In addition, BetterBuyMedia offers not only radio but also other media such as TV, Cable, Print, and Internet. We also provide, what we strongly believe is of utmost importance, high-end, attention getting, and award winning creative for all media.


How can a station and advertiser easily start using your system? What software/hardware is needed?

Newmark: There is no contract required.  Any station within Arbitron's 297 MSA's are eligible.  No software or hardware is needed.  Getting started is as easy as signing up to be invited.  If a station is invited to auctions but has no inventory to sell that week, they simply delete the email and ignore the auction that week.  Aside from our unusual process, Bid4Spots looks to the station like a regular ad agency.  Our only income is the standard agency commission, so stations bid in gross dollars and Bid4Spots pays the net.

Perlson: TargetSpot works with all major media players, is scalable and rarely requires any additional hardware or capacity investment for stations who are already streaming and selling their own advertising.  We can easily integrate with most streaming providers and ad insertion software. Stations can contact us at partners@targetspot.com to learn more. Advertisers can get started with as little at $50. They need only to create an advertiser account or contact us at sales@targetspot.com to get started.

Simmons: There is no special hardware or software necessary other than a computer. All they have to do is go to BetterBuyMedia.com and navigate through our simple sign-up and posting process.

How has your client base (total advertisers) increased over the past year? What percentage increase have you had over last year?

Newmark: Year over year, our auction volume is increasing at approximately 300%. 

Perlson: TargetSpot launched in late 2007 and in that time has built a network comprised of over 30 broadcast radio groups and web-only audio sites. The ad network expands to reach new markets week after week, and the growth in regional and local advertisers follows. Likewise, with the steady growth of available audio and pre-roll inventory, TargetSpot now attracts national advertisers and agencies.  View current available inventory in the TargetSpot Audience Map at http://www.targetspot.com/home/map_data/map.php

Simmons: BetterBuyMedia.com has been a functioning website in development over the past year. In that time, we have doubled our client base.

What percent of your client base over the last year has re-ordered-what's the return rate?

Newmark: Advertiser retention is approximately 90%. 

Perlson: TargetSpot is new to the marketplace and as such this data is not available.

Simmons: Clients who are now using our service have made long term commitments to BetterBuyMedia.com.


Do you plan to grow your business beyond remnant inventory?

Newmark: No.

Perlson: TargetSpot doesn't operate in the remnant inventory space.  We leave that to last minute services and direct response networks.  Our clients assign us a percentage of their inventory across all day parts and stations, and we make it available to advertisers on a consistent basis so they can plan their campaigns both short and long term.  This inventory is highly targetable and the advertiser performance and posting is visible in real time so modifications can be made on the fly to improve performance even further.  Therefore, this inventory is probably the most valuable audio inventory an advertiser can buy. 

Simmons: While remnant inventory is available on BetterBuyMedia.com, our structure has always allowed clients to purchase flighted advertising.


How can we be sure your service isn't hurting pricing?

Newmark: There are a number of answers to this question. Stations control the process. Station bidders decide whether to enter in a given week. Station bidders decide which auctions to enter.  For example, if they see an advertiser that is already purchasing a schedule on their station, they may or may not decide to enter that particular auction.  Also, if they do not like the sound of a commercial or have too many of a particular category of advertiser, they may also decide not to enter a particular auction. Station bidders decide how much inventory to post Station bidders decide the rates and see how those rates affect total winnings. Only "unsold" inventory, so this class of inventory was not being monetized anyway.

Pricing implies that the advertiser knows what the price is and we do not disclose rates to advertisers. The question also implies that you are referring to pricing on specific stations; since advertisers are not able to purchase airtime on specific stations, it is not possible to affect pricing on those stations.

Radio stations have many choices today when it comes to remnant buys.  They will only choose those systems or methods that give them the most control and maximize revenue.  Our marketplace was developed in partnership with radio stations.  Patty Newmark and I are also the owners of Newmark Advertising which specializes in radio endorsements.  We spent many, many months prior to launching Bid4Spots asking for their ideas and input.  The system you see today is designed with their needs in mind to protect the integrity of station-specific pricing, minimizing the time involved in bidding and maximizing revenue. 

Perlson: Since our inventory is all premium, our minimum pricing is on the high end of what stations typically price their streaming inventory at.  And by giving advertisers transparency, control, real time posting and reporting and granular targeting, they typically find value at this high end - more so than lower priced network ads.

Simmons: With BetterBuyMedia, Sellers absolutely control both inventory and
pricing. Therefore, only the Seller can affect pricing.


If you had to do this over again three years ago, what would you do different? What have you learned?

Newmark: Hindsight, as they say, is 20/20.  So, of course, there are a few things I would have changed but they are minor.  Patty and I have been blessed with wonderful relationships with stations across the country who have given us immeasurable amounts of time, support and advice as we have worked to build this marketplace.  We are huge supporters of radio, as anyone who has worked with Newmark Advertising knows, and this partnership with stations has resulted in participation by stations at levels I would never had imagined.  In our small way, we believe we are helping the radio industry and advertisers with a classic win-win process.

We thank RBR for this opportunity to reply to these questions and invite stations to sign up to be invited to auctions by clicking this link:https://www.bid4spots.com/SignUP.aspx

Perlson: As a new technology company with a product that has been in development for several years, I can say that at this point, there is not much we would change.  The TargetSpot product IS the different product we all wanted to build - we have all built advertising businesses before, online display, search, contextual and network radio - and TargetSpot is the product of what we have learned over the past 10 years of building advertising businesses.  I am sure there will be a lot more to learn along the way, but we couldn't be happier with the way TargetSpot has turned out.

Simmons: With the software we have designed, we are committed to the potential of our "Priceline for Media" online auction concept. The only thing we would have done differently would have been to start sooner.