A New Platform for Media Transactions

In a move with far-reaching implications for the advertising business, three of the world’s ad giants are teaming up to create a new company dedicated to establishing an electronic platform connecting media buyers and sellers via common protocols.

The Interpublic Group of Companies Inc. , Omnicom Group Inc. and WPP Group plc — the world’s three largest ad agencies — said in a joint statement that the new platform will be aimed at improving the complex flow of data and information related to transactions for media time and space.

The new platform will be designed to act as a service through which data and information providers can be easily accessed, “replacing the fractured and labor-intensive process in which media data is exchanged today,” the companies said.

“Interpublic, Omnicom and WPP believe that 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 and cost efficiently,” said Interpublic chairman John Dooner, Omnicom chairman John Wren and WPP Group chief executive Sir Martin Sorrell in a joint statement.

Although it doesn’t have a name yet, the new company will be based in New York City and headed by Michael Lotito, formerly president and chief operating officer of Interpublic’s Initiative Media North America.

Web advertising “will be a component for sure,” Lotito told internetnews.com. “However, the system we build will enable media transactions in every medium,” including print, broadcast, and cable.

He said he expects the platform will be Internet-based, but that it has not been decided yet.

“We are not building a media exchange — we will let the (advertising) business run the way it does today, only using technology to make it more efficient and faster,” Lotito said “So much of what we do will be building common protocols, letting everyone use the same language. We don’t care if we continue using ad banners or invent something new, it should fit into this protocol.”

Asked about the challege of such an endeavor in an environment that changes as rapidly as the Web, Lotito said with a chuckle: “Don’t think I’m not suitably nervous.”

Interpublic, Omnicom and WPP said they expect to formally launch the new company in the second quarter of this year. Also, other advertising/marketing companies will be invited to join the venture.

Clearly it remains to be seen just exactly how much shrift is given to interactive media — the formats and standards for which are constantly changing. If they are given an important place in the new firm — built into the platform from the start, for example — it will signal digital media’s growing acceptance in the traditional advertising industry. If not, it will indicate that interactive advertising still is not considered a critical part of the media mix.

This is not the first time that players in the advertising industry have set to work solving the problem of inefficiencies in the media buying process. A host of start-ups has begun to build platforms designed to connect media buyers and sellers, but this effort — given that it has the backing of the major players in the industry — would seem to have a significantly better chance of getting off the ground.