Ad Industry Group to Launch E-Marketplace

Three advertising industry giants announced Thursday that they have agreed to jointly establish an electronic marketplace for buyers and sellers to conduct their media business dealings.

Slated for a formal launch during the second quarter of this year, the new firm is being formed by the Interpublic Group of Companies (NYSE: IPG), Omnicom Group (NYSE: OMC) and WPP Group (Nasdaq: WPPGY). Financial details of the yet-to-be-named venture were not disclosed.

According to the companies, the electronic platform will utilize common protocols and help replace the "fractured and labor-intensive process" in which media data is currently exchanged.

"Technology presents a great opportunity to create a platform from which the billions of dollars now spent on media every week can be transacted much more effectively," the firms' top executives said in a statement. "We expect that the platform will both improve service and cost-efficiency to our clients and simultaneously benefit media sellers."

Members Wanted

WPP, one of the largest advertising and public relations conglomerates, counts among its agencies the high-profile firms of J. Walter Thompson, Ogilvy & Mather Worldwide and Y&R Advertising. WPP's revenues last year topped US$6.6 billion.

Omnicom's advertising properties include BBDO Worldwide, DDB Worldwide and TBWA. Interpublic's holdings are comprised of McCann-Erickson World Group and the Lowe Group. Last year, Interpublic reported revenue of $5.6 billion.

The three companies said that other advertising and marketing firms will be invited to join the new enterprise, which will be based in New York City. Heading the endeavor will be Michael Lotito, a former president and chief operating officer at Interactive Media North America.

True or False?

Although the Net ad industry has seen its fortunes stumble over the past year, a report released earlier this year by AdRelevance concluded that the "popular buzz" surrounding the recent downturn was often driven by hype, rather than reality.

For instance, the study found that the online ad bubble "showed no sign of bursting" during the fourth quarter of 2000. Instead, it said that the period saw the "continuing evolution of a maturing advertising medium," which is creating new opportunities for advertisers and new revenue streams for hosts.

On a particularly optimistic note for online ad firms and those that have relied on them for revenue, AdRelevance said that while the "Internet advertising story for 2001 has yet to be written, one thing is certain: it will be a best-seller."

Some of the factors, cited in the study, that will help alter the nature of the industry in the coming months include lower costs, improved options in advertising types, and an increasingly important role for traditional advertisers with online companies.