What am I bid for Bagel Bites?
H.J. Heinz holds online 'auction' of scatter ads for snack-food brand
By Steve McClellan -- Broadcasting & Cable, 11/13/2000
In the upfront advertising market, the networks frequently try to play advertisers against one another in the hope that they'll pay a premium to avoid being locked out of "must-have" programs.
Late last month, one advertiser, H.J. Heinz, tried to turn the tables, inviting networks to bid-in an online "reverse auction"-for a piece of its second-quarter scatter advertising budget for its Bagel Bites snack-food brand.
Did it succeed? Heinz Media Director Chuck Lanphear says, unequivocally, yes. Calling it a "successful experiment," he says Heinz will consider extending it to other brands and he hopes it will become a regular way of doing business.
Not everyone who was invited to participate did so. Both NBC and the Turner Networks group declined to take part. Heinz wouldn't say which sellers did participate. The Discovery Channel is said to be one of them but declines to comment.
It wasn't the first time advertising time has been sold in online auction. Networks and other TV programmers have done it, usually for spots they can't get rid of, sources say.
The WB tried it for the 100-plus group of affiliates that air primarily on local cable channels. Sales Vice President Jed Petrick says he won't do it again: "We sold some inventory, but we've had far more success selling it in the traditional way."
But the Heinz auction (conducted by Pittsburgh-based Freemarkets. com) was the first advertiser-initiated auction in which the buyer solicited cost-per-thousand price quotes for a time buy, Lanphear says. The actual scope of each deal, in terms of gross rating points purchased and total dollar volume, was negotiated post-auction.
According to Lanphear, five cable programmers participated in the Oct. 20 auction, and Heinz decided to split the multimillion-dollar piece of business among three of them.
Lanphear calculates that the company saved 15% buying the time on auction compared with negotiating deals in the normal scatter market.
That goes directly to the point to which some nonparticipants objected: that the auction process "commoditizes" advertising sales. Which is to say it takes away the seller's ability to pitch the unique value of one distributor over another and milk the deal for extra dough.
Says Jay Linden, NBC senior vice president, sales development and marketing, "We think the online process for sales is about data exchange and adding value. We felt this was a commoditization of the process. We're not looking for people to come between us and our customers."
Lanphear counters that at least some portion of advertising budget for most products is simply about "eyeballs. It is a commodity." There's also a portion that goes beyond mere eyeballs to "value-added" aspects, such as product placement, sponsorships and contests. But the auction, he says, was used to address the commodity portion of the Bagel Bites budget only. "We had value-added deals already placed well in advance."
Still, he recognizes that he has to convince the nonbelievers that the auction process can be beneficial. He has scheduled meetings with those who declined to be involved, "to find out what they might like to see changed about the system, so that we might modify it for their benefit."
