The “eureka” moment when David Newmark came up with the idea for an online auction for unsold radio advertising time came as he watched his son buying music on Ebay. The bad news for Newmark was that selling remnant radio time online had already been tried. The good news was that previous attempt had not been successful, leading Newmark to determine that it was using the traditional auction method rather than the technology that led to the failure. “Why would advertisers want to bid the price up and pay the most when they could negotiate with radio stations and get a better rate,” asked Newmark, chairman of Encino-based Newmark Advertising. That was how Bid4Spots.com was born and the year-old online reverse auction site is now bringing in between $50,000 and $100,000 per week for stations in 300 markets around the country from which Newmark gets a commission. Newmark said unsold air time which he compares to a passenger jet taking off with empty seats is not a new problem in the broadcast industry and has probably existed since commercial radio has been around. But Newmark theorizes that radio stations had reluctance to dropping the price on unused air time, not wanting to devalue its inventory and concerned the advertiser would not come through with its money or the commercial spot. Also, the drop in price would cause regular paying clients to be unhappy when finding out other advertisers had paid less, said Jeff Kesserman, the national sales manager for three radio stations in the Boston area who has been using Bid4Spots since May. The anonymity of Bid4Spots removes that concern, Kesserman said. The reverse auction concept hinges on radio stations making bids on what the advertisers are willing to pay to run their spots. The auctions take place online during a four-hour window every Thursday for ads that will run the following week. The timing for the auction was critical and Thursday was described by Newmark as “the perfect moment” to have radio stations put in their bids. “That is close enough to the following week when stations know what is unsold and un-sellable yet far enough away that stations can still put ads through their traffic system,” Newmark said. Radio advertising generated $21.5 billion in revenues in spot and non-spot ads during 2005, according to trade organization Radio Advertising Bureau. Mike Boggs, national media director for Rainmakers International, a Los Angeles-based advertising agency, said that the Bid4Spots business model will become accepted practice in the future. The online auction site was attractive for the company because it gave access to regional markets and has a high number of active stations participating in the auctions. “It’s not worth my time to go for (unsold time) on just one station,” Boggs said. “But if I can get on 20 stations then it becomes worth my while.” But Kesserman said that while Bid4Spots has been successful for his stations, it is not a method that can be used for all advertisers, particularly large companies who plan ad campaigns weeks in advance. “Somebody whose advertising is less time specific and time crucial and who has a message to get out, those are the advertisers that this would be good for,” Kesserman said. Newmark has filed to receive a patent for a reverse auction for radio and television time using cost per thousand as a basis. Although his pending patent includes television advertising time, Newmark said he has no immediate plans to expand the website’s scope because there is a far less unsold television time than radio time.
