NEW YORK-Applying Charles Darwin's principles to the world of online advertising exchanges, adman Paul Benjou predicted last week that "perhaps three or four" of 40 players would ultimately survive.
Benjou, senior president at Interpublic Group of Cos.-owned agency DraftWorldwide, was one of several offering that opinion before a Myers Forum audience here. Fox Broadcasting Co. sales president Jon Nesvig said he also expects a shakeout.
"I would guess there would have to be consolidation," he said.
Mediapassage executive vice president of technology and business development Carl Bryant described the field as "very competitive," and played the theme music from the CBS series Survivor
to make his point.
Then, in a move designed to ensure they won't be voted off the island, he announced that Mediapassage and OneMedia-Place have merged, combining OneMediaPlace's front-end solution with Mediapassage's back-end abilities.
Mediapassage, which started in the newspaper field, bought Broadcastspots.com last year in a bid to enter the broadcast marketplace.
Jerry Machovina-who left AT&T Broadband to join OneMediaPlace as CEO almost exactly a year ago, when it was called AdAuction.com-and Mediapassage CEO Gilbert Scherer will be co-CEOs of the combined Seattle-based entity, to be dubbed OneMediaPassage.
Myers Reports Inc. reported last week that less than 9 percent of marketing and ad-agency media executives surveyed last December had used an online ad exchange in the previous six months. Nearly 39 percent said they planned to use one by 2005. But nearly half (47.9 percent) said they have no plans to use one.
Nonetheless, Myers Reports CEO Jack Myers predicted that 18 percent of all media buying would involve exchanges in within two years . Several speakers and attendees doubted that prediction.
"Clearly, the next two years are absolutely critical," Myers observed. "By this time in 2003, we should know whether media exchanges are here to stay and, if so, the names of the major player or players."
Speakers from several other companies balked at the online-exchange label, including lesser known firms like MediaInternet, eMadison and MediaOcean, whose executives insisted they offer advertising software solution.
MediaOcean president Ray Heacox maintained, "there's no one-answer-fits-all" when it comes to projecting profitability and survival.
The few panelists who said they have used exchanges refused to identify them.
At McCann-Erickson's Universal McCann buying arm, senior vice president George Hayes said there's been "a gradual shift away from 'total revolution'" and toward working within the ad community's existing infrastructure.
"They're trying to fit in" to see where the problems are, added Charlie Rutman, executive vice president at Carat USA's Carat MBS unit.
Some in the ad world also "fear losing control over their inventory," Eonxchange Inc. president Anne Sholtz said. That fear has some foundation.
Last year, a cable network executive said he stumbled across some of its avails on an exchange, being sold by a third party.
In any case, National Cable Communications CEO Tom Olson felt that exchanges would be limited to consulting roles.
24/7 Media's CEO Dave Moore concurred.
The backroom "could be at least an entrée point" for exchanges, rather than a source of end-to-end solutions, said Media-Com Worldwide senior vice president Valerie Muller.
Rutman said "the physical management of [billing] discrepancies is incredible," but added, "I don't know that [the backroom] needs to be outsourced" to online exchanges.
A couple of trends seemed to be forming in the exchange sector: a move toward proprietary exchanges and growing competition from unusual quarters.
AdOutlet CEO Alan Masarek announced it would license its Advertising Distribution System to media companies, particularly cable, broadcast-television and radio companies-thereby enabling the media to create their own branded proprietary online sales and transaction "storefronts," rather than going through AdOutlet's general Web site.
Bristol-Myers Squibb Co. vice president of media and program services Peggy Kelly predicted an increase in such proprietary approaches. Muller agreed, citing security concerns.
Machovina said that his firm is now working on "a private-label strategy" with Ford Motor Media.
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