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Friday, September 30, 2005

Selling Billboard Space... Thru Craigslist? On the Inefficiency of Media Buying

As we know, the paid search auction has been the great shining tangible example of how inefficient markets can be quickly rationalized through an online auction scenario. Overture and AdWords foreshadow a revolution in media buying globally.

One example is physical billboards, many of which could be changed to all-digital (admittedly more costly) formats, which could be activated and controlled via online platforms open to advertisers and managed by a broker.

I mean just imagine how inefficient this must be - a company trying to sell remnant billboard space through Craigslist.

Someone will buy, and money will change hands. But when you look at the potential for larger and mid-sized advertisers to incorporate offline media buys into an integrated bidding platform, the potential efficiencies -- and benefits to the sellers of ads -- are staggering. On efficient pricing alone, a widespread auction with many participants would leapfrog over an old economy method where someone tries to sell a remnant ad unit, sets an arbitrary price at $550/mo., and winds up haggling and wasting time, eventually selling it for less than it's worth.

To extend the argument a bit farther, there are a lot of other goods and services that are being bought and sold "online," (scare quotes added for emphasis) that really are still changing hands in an outmoded way. As fun and lively as Craigslist is, it's a pretty primitive technology; a version of a flat classified section in a print publication, or the "swap shop" shows on public access cable.

Quite a bit of office space changes hands on Craigslist -- all the high-touch stuff involving sublets and workspace sharing that sometimes seem like half business transaction, and half personal ad. But outside of those odds and ends, a massive trade in office leasing is still highly chaotic, with disparate brokers and such mocking up different listings sites to generate leads. Here, imagine the headaches landlords could save by participating in a more rational lead generation system. What if they had an intelligent way of targeting their best prospects, and vice versa? Maybe you wouldn't see those big ugly FOR LEASE, 555-343-3300 banners on beautiful art deco buildings quite as often.

Buyers and sellers are still having too much trouble finding one another in too many markets. Moreover, the average buyer does not know about the best new platforms for tapping into new-economy models. Someone might tell you about a great way to find a golf buddy or cheaper tee time through a meta-tool or vertical portal that just got released, but how often do we remember to try the tool? Adoption comes slowly, but it comes. Cultural change is very slow in some businesses. Take golf, since I just did. :) How about those online tee time bookers? If you've ever tried one, chances are it's a second-class citizen in how the course actually takes bookings, so they might lose or mess up your reservation. Or, if you look at available tee times online and then immediately phone, often you'll find that more tee times are in fact available than they online system indicated. So... you stop using the online tool. Not only isn't it better, it's actually worse. And $2 off a round as an incentive to use it isn't enough. Online, you expect to achieve more dramatic savings (even if it's finding a cheaper available round at a nearby course).

We've come a long way, baby... but there's still a long way to go.

Posted by Andrew Goodman




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