The media buying and advertising industry has evolved into a billion-dollar business. Advertising space on television, in magazines, on the radio, in newspapers, and even on billboards has become expensive and costly for all involved. This business has also become very lucrative and through the advent of the Internet, the sky had become the limit in this industry. As the new millennium approaches, businesses are coming to realize the type of opportunity the Web provides as an online media provider. The Internet is a new venue that did not exist a few years ago, and an intermediary in this industry can create value added opportunities for the media buying industry that did not exist before.

There are a limited number of intermediaries that have entered the media-buying arena on the Internet. They consist of the following:

http://www.AdOutlet.com

AdOutlet.com’s debut online was June 14, 1999. It is based out of Columbus, Ohio and provides a real time, online marketplace for the purchase and sale of discounted advertising space. AdOutlet.com’s main niche is the ability to provide discounts of up to 80% off the premium price of ad space. The publisher here is able to increase advertising revenues by offering excess advertising space online to buyers. Media buyers are able to easily purchase the ad space here, and are able to browse through the advertising inventory to view what is available. 

This site offers a simple and efficient distribution channel for those buying and selling discounted advertising space. As a business-to-business electronic commerce service, this service provides a valuable way to extend the "shelf life" of advertising inventory that would have otherwise gone unused, and provides information to anyone interested through the World Wide Web. Media buyers can register through the company’s website, and publishers are able to register through emailing the company or simply calling.

AdOutlet.com is currently positioned as the leader of the online market of discounted ad space. AdOutlet.com’s Chairman and CEO Alan Masarek is quoted as saying, "Our goal in providing this electronic marketplace for advertising buyers and sellers is to use technology to improve the fundamentally-inefficient nature of media transactions. We are convinced that this e-commerce based solution is the future of media buying because it optimizes the ease and profitability of our customers". All members on the advisory board make up a majority of the financial backers for AdOutlet.com. One of their largest contributors is John Danner, the Chairman of NetGravity (NASDAQ-NETG).

 http://www.Adauction.com

Adauction.com was founded in September of 1997. It currently has sales offices located in New York and Atlanta. It is an online media service and marketplace offering a business-to-business electronic commerce service for buying and selling premium advertising space for online, broadcast media, print, and out-of-home. An auction format has been set up here in order to make sure that both the buyers and sellers benefit, and receive the best possible price for the advertisement.

Daily auctions are held here and advertisers are able to bid on all types of media, although the most successful media used currently appears to be online advertisements. Adauction.com promises fair and equitable prices and can assist with the needs of both traditional and online advertisers. Adauction.com's website offers a unique resource for both the buyer and seller. The site is specifically divided so that the buyer and seller receive step by step instructions on what to do on the site and how it will benefit them. Adauction.com cites their primary reason for being as "the opportunity for greater exposure to advertisers-especially direct buyers".

AdAuction.com is presently a privately held company with headquarters in San Francisco. AdAuction.com has raised more than $30 million through venture capital investors, and has received investments from Lehman Brothers, Amerindo Investment Advisors, Inc., Fayez Sarofim & Co, Convergence Partners, Geneva Partners, Viventures, and New Millennium Partners. For more information please email investorrelations@adauction.com.

http://www.webtoads.com/

Webtoads.com is an intermediary that specializes in custom consulting for each and every type of business. Webtoads.com offers demographic research information, site upkeep, site planning building and design, and an added feature known as their "e-architects", who continuously structure your site for you. Webtoads.com offers consulting in marketing, sales, design, Internet technology, culture and trends. All media buying and advertising is negotiated for the advertiser, therefore making it easier on the more inexperienced advertiser.

Webtoad.com offers a 40-60% discount on the media bought, and this makes up for the 15% agency fee that they charge. However they do not sell other types of media. They offer a full range of consulting services and resources mainly for online advertising. Every form of media they deal with has to do with the Web. As a website that appears to be successful, future possibilities here include media buying in print and broadcast media. They offer a wide variety of full service resources and negotiations for discounted prices for a minimal commission charge. If the same strategies were applied to other media, there would be a chance for more profit, especially since this website is set up for international business as well.

http://www.ulisse.wavenet.it/

Target Europe provides media buying and planning services for newspaper, Internet, and Television media. The main focus here is international (although they deal with national as well), as they are based out of Italy. The website can be read in Italian or English, and can be difficult to understand due to the unclear nature of some of the wording structure.

Target Europe provides consulting services, research services, and various options to keep costs down for their clients. An advertiser can manage their own 'ad space' during the time the advertisement is showing so as to avoid costs that might be otherwise incurred. In addition, Target Europe offers 'ad rentals' with different forms of various ads to choose from for the advertiser; these are offered at a discounted rate. Additionally, telephone booking can be bought along with an advertisement. This enables a potential customer to call about what is being advertised, if they choose to do so, and Target Europe will handle all calls received.

Target Europe appears to be a developing intermediary for media buying and advertising. The site is set up in the right direction, and needs to become more developed in order to compete with Adauction.com, and AdOutlet.com. A major advantage that Target Europe has is that it is set up for international markets.

There is a limited amount of full service media buying intermediaries. There is a niche here that many businesses can tap into and profit from greatly due to the lack of choices through the Internet. Currently, there are many businesses that have taken themselves online through a website. Examples of these include sites such as:

U.S. Media Inc.: http://www.us-media.com/

Concept Media: http://www.concept-media.com/

Image Quest Communications: http://imagequest.com/

Fountain Street Marketing Technologies: http://www.fountainstreet.com/

If these businesses, and others similar to them create online media buying opportunities for advertisers and buyers a significant change will be seen within the media buying industry. Business will no longer be conducted in the traditional sense, giving way to a more diverse and customized business process that both the buyer and seller will benefit from.

The major players here, Adauction.com, and AdOutlet.com are based on a functional hub with a definite business process focus. The buyers and sellers are brought together here in order to maximize benefit for both parties. Better matches and better prices are sought after here. The intermediary is taking what is otherwise a perishable good, and extending its life cycle provided an additional opportunity for profit. The goal for each of the functional hubs is to obtain as many buyers and sellers as possible. Prices are set for the most attractive bid given, providing a chance to save money. The true success lies in the hubs ability to follow up on all purchases made, and to provide every service that they claim they do with no misrepresentation. The depth and the breadth on these two sites is developing with many services and resources provided, including market research for each individual client.

The main problem here is that currently, fragmented services are provided through both of these websites. AdOutlet.com only offers discounted media space, that is space that was unwanted and unused through the traditional venue of media buying. This creates limited buying possibilities for the buyer and will push him or her to purchase the rest of the space needed elsewhere. The focus for what type of targeted businesses is not clear here. Is this site mainly for mom-and-pop operations, the medium-sized business, or large businesses? The process after the initial purchase of ad space is not clear. Does a client truly benefit from purchasing through the Internet, and is time truly saved, and is there a way to contact the company if a server is down?

The same questions can be posed for AdAuction.com. This site links the buyers and the sellers together through an auction and provides an outlet to contact direct buyers for all media inventory. The process involves three points of continuous contact as seen below. All three benefit from a transaction.

Markets here are created through auctions and match-making techniques so as to ensure the best possible fit for each advertisement created and bought. Target Europe's website (http://www.Ulisse.wavenet.it/) is a functional hub as well but it does not offer all the resources that the sites discussed above offer. If fact, Target Europe appears to still be in the process of developing to a full-service media buying intermediary. Webtoads.com has not yet been able to provide the type of reach that Adauction.com and Adoutlet.com are able to provide.

These sites are taking original business models and making them more obsolete as time goes on. The Internet has created such tremendous opportunity and reach that traditional business models are being replaced. This industry is just beginning to become Internet savvy. Advertisements on the Web have become a source of revenue and the realization that all media can be sold and distributed through the Web is just beginning to come to fruition. Ecommerce is unfolding into its third stage: "the interconnection of business processes - inside the company and between organizations - this is where the largest multipliers in terms of value are expected to be found".

 What is the business model of each intermediary?

As a whole, the media buying intermediaries fall under the business-to-sales model. Each intermediary offers a service to the buyer and seller, and is attempting to create a marketplace. These intermediaries fall under an "idea concept" and exist only through an opportunity on the Web (ie. the Web is where someone can purchase the unused media space, which otherwise would not have been heard of). Traditional media buying intermediaries have not provided this opportunity in the past. Benefits here are produced both upward and downward within the value chain of this industry. A set of specific applications of information technology are used here to ensure that the buyer and seller receive the maximum benefits during transactions. In order to be successful, there must be a number of value-added services provided by these intermediaries. The focus here should be more on 'depth' rather than 'breadth'. The more of a community these intermediaries can build, the more loyal their users will be. Both Adauction.com and AdOutlet.com have begun to place value-added resources on their sites such as 'help & resources' and 'performance by campaign' figures. The intermediary here attempts to offer a certain level of expertise in providing all the necessary information needed to make a beneficial offer. The key here is to provide ample content and to make sure that there is connectivity between the buyer and seller. The intermediary acts as a neutral third party and transfers all transactions. It is essential to build 'depth' within this business model.

The new media buying intermediaries are offering services that otherwise would not be offered through the traditional method. Marketing strategies and benefits for the major players here are as follows:

• There is a discounted, cheaper price paid for the advertisement that traditionally does not exist.
• There are guarantees that all information will be transferred and handled in a proper and ethical manner.
• The buyer is offered information specific to their needs.
• The seller is offered information specific to their needs.
• FAQ's about the websites are offered.
• There is an opportunity to purchase ad space that would have otherwise never been used.

The full benefits to the buyers and sellers here can be summed up as follows:

• Provides new marketing and distribution channel to customers.
• Provides better customer service through online interaction.
• Provides more complete product information to buyer.
• Automates order and fulfillment processes.
• Lowers overall operational costs.

To Market Host

• Protects current role or creates new role within the commerce chain.
• Establishes high "value-added" in digital economy.
• Increases service levels to existing customers.
• Leverages current information and customers.
• Provides access to more information and suppliers.

• Lowers up-front costs and risks.
• Provides access to secondary and excess supply auctions.
• Provides a more comprehensive solution.
• Eliminates on-going software upgrades and maintenance costs.
• Utilizes outsourced expertise.

Source: 1999 Net Market Makers, "Digital Marketplaces: Enabling the Internet Economy"; http://www.netmarketmakers.co

Both Adauction.com and AdOutlet.com have focused on relationship marketing and creating a sense of community. The websites include an area for suggestions and improvements as well. As a subscriber, a member of AdOutlet.com is greeted by name each time. Email messages are periodically dropped indicating new space that may have come in or new features and offers of the website. The site thanks you for registering with them and promptly sends the new subscriber their user name and password. An individual (the national sales manager) signs all incoming emails, and a specific email address is provided for any service questions.

 Adauction.com very distinctively separates their website for the buyer and the seller. The buyer is given step-by-step instructions on how to proceed, as well as resources and services specific to their needs. Things such as testimonials and case studies are listed in order to gain credibility. Consulting customer service is a big focus for the buyers. They are there to spend money and make a considerable investment so it is important to ensure that they are buying something that is worth their while. The seller receives similar benefits. Here there things such as a glossary of terms, FAQs, and step-by-step instructions involving getting started, the selling and delivery process, how to track delivery and performance, and auction rules. Traffic teams here are developed to ensure quality assurance. Marketing teams are set up to notify businesses within the industry of the services provided.

Target Europe is not as successful at creating a sense of community and a one-to-one relationship with the customer. The site does not contain as many resources and services as the other intermediaries. Webtoads.com is well prepared to create a sense of community and lock the buyer or seller in but this site is not advanced enough to be able to sell all forms of media.

Currently, the available intermediaries are mostly providing discounted advertising space. This makes for a sales cycle that is not consistent all year. There are continuous peak and down times. As these intermediaries grow, the sales cycle will mostly likely move towards a more constant level due to the varied amount of media sold at one time. In order for an intermediary to survive in this niche in the future major liquidity must be established. The site that offers the most resources, services, time, and advertising space will be most sought after and all other sites may be struggling to survive. Maintaining a proper relationship with all their business members is critical to the sustained success of the media buying intermediary. All it takes is the browsing through the Web for other sites to lose a valued customer, so these intermediaries must find unique ways to locks their users in so that they do continue to come back.

Many obvious problems can be overcome with intermediaries such as Adauction.com, AdOutlet.com, and Target Europe by simply providing all the information of each and every service provided over the Internet and directly to the buyer and seller. There are 24 hour hotlines set up for general questions and consulting services are provided as well. The key to succeeding within these intermediaries is to keep the process simple in order to increase participation and bidding among members. An emphasis is placed on the financial strength and backing of the company in order to enforce credibility of the services provided.

Product, or rather advertisement descriptions are best viewed through past examples, past client testimonials, and depending on the media, television clips. Online advertising done can be easily viewed through the Internet. The discussed intermediaries make a point to say that they are getting paid from a slight commission (15%) that is either coming from the buyer or the seller. Their statement is validated by pointing out that there is such a high volume of buying and selling of off-peak ad time, that they can afford to do it that way. This helps to maintain credibility.

Difficulties that may arise in the future may include shut down servers or slow websites which may make these intermediaries an inefficient form of communication. Any future obstacles can be avoided by forming a partnership with something such as a media company. These intermediaries will then have the strength and the financial backing to continue business-to-business e-commerce without any major shortcomings. Setting up offices in every major city would be beneficial as well because consulting services can be provided at individual businesses, which some users would prefer, and this would help to build a sense of community.

Payment issues are verified for each member involved through accepted statements signed by each party electronically. Complete confidentiality is ensured and these intermediary websites guarantee quality assurance. A history of your usage of the services rendered are also provided and the user is able to track all expenditures with these intermediaries.

Trust is created through the intermediaries who ensure that all transactions are held in good faith among businesses. Terms and conditions are stated clearly, and, if violated, are monitored by the intermediary and handled accordingly. This helps to build the relationship between the buyer, the seller, and the intermediary. Past testimonials help to ensure that the business being used is a reputable one.

Within this particular venue, the buyer and seller are held on relatively equal ground. The media buying intermediary wants to bring in as much traffic as they can from both sides so as to increase and create competition among buyers. Currently, Adauction.com relies on heavy traffic in order to encourage bidding on their site. The more that businesses are aware that these offers are out there the more frequently they will use the services on the website. All the resource options that are offered are an excellent way to get the business involved and aware of what is going on. The process must always remain simple because this is still a fairly new transition from the traditional method to the new way.

These intermediaries are still in the first phase of acceptance. There are still quite a few things that need to happen in the future. More forms of media must be sold- not a majority of online advertisements only. These services must be emphasized and reinforced as easily available. As these intermediaries grow they should form credible partnerships and strategic alliances with various television networks, radio stations, and even magazines (for print advertising). The stronger their relationships are with media channels, the more advertising space they may be able to provide.

Buyers and sellers should receive a value-added advantage that they could never attain through a traditional intermediary. Not only should they receive a discounted price on what is provided but they should receive an additional discount for every certain number of advertisements sold or purchased. For example, for every five advertisements sold an additional discount is included in the sixth advertisement as well as services you would otherwise have to pay for, such as tickets to an event in the users area or an entry to a sweepstakes sponsored by the intermediary.

This can be used as a short-term strategy so as to solidify a strong customer base, which is currently still being built up through all the intermediaries. Long-term strategies can include setting up a buddy-referral system where the user would benefit with increased discounts or free merchandise. These intermediaries should produce their own merchandise and emphasize to all the various businesses that they deal with their own sense of community and team spirit. International opportunities should be explored and developed and websites should be written and understood in different languages.

As time goes on, the number of media buying intermediaries will grow creating an increased need for differentiation among the various intermediaries. If each intermediary is able to differentiate, for example, only focus on small-to-medium size businesses, then they will be sustained for a long period of time. As technology advances these intermediaries will be able to provide an interactive method of selling that will greatly benefit them in the future.

Current e-commerce technologies are employed within these media buying and advertising intermediaries. Future technology will allow true interaction among buyer and seller. Not only will there be a written description of what is being provided but the buyer will be able to view the television ad, or hear a radio ad sample immediately. This will greatly enhance the purchasing of various forms of media.

Confidentiality is protected through the use of digital certificates and firewall technology. Authentication processes are also used for additional protection, especially since there is an auction format in use. Multiple payment options are available at each media buying intermediary. 'Electronic purchasing accounts' have been made available and this allows the users to track all information regarding previous purchases. Digital certificates are used here to authenticate both the seller and the buyer during transactions.

Businesses may still be apprehensive about dealing with a business solely over the Internet. Future trends indicate that five years from now, business-to-business e-commerce will be as popular as retail outlets are today. The Internet has become a new paradigm for communication and it is essential for these intermediaries to ensure that there is an appropriate level of breadth and depth on their websites.

A critical factor is that there is still "limited bandwidth" here. When dealing with the media buying and advertising business, it is essential that there are convenient methods to view all the various forms of media that are offered. If customers of these sites did not have to wait for long periods of time for images to load, there may be a shift in terms of the number of users. Many users are looking for the maximum amount of convenience and they want it quickly as well. Unfortunately, that is not the case through the current intermediaries at present.

The media buying intermediaries are still at the earlier stages of development. Technology over the Internet is continuously improving at a rapid rate. The use of 'bandwidth' will greatly assist the media buying industry online, and will help to ensure a loyal user base.

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