iMedia's media strategies editor concludes his thoughts about a media marketplace subject to auction.

My column last week garnered a great deal of response. Discussion lists I belong to as well as conversations had with friends and associates from within the industry were all a source for some amount of comment on the idea of media in an auction marketplace.

A lot of those discussions moved beyond simply whether or not media can be subjected to an auction model and still yield quality value for both buyers and sellers. The discussion frequently moved to just what kind of value do media actually have?

Just to be clear, I thought I’d do a little redux on the subject of media in an auction marketplace.

Auctions only work when the value of a product is indeterminate, as I wrote. That could be either a warehouse full of 1994 calendars or a Van Gogh. This economic esprit can apply to some media, like the Angelfire crap that used to make up the bulk of Flycast’s blind-bid media network, or perhaps the home page takeover on Yahoo!. But it’s not going to work for TV spots on "Scrubs" or 300x250s on Marketwatch.

Some suggested that the value of measured media is nothing but indeterminate until the media is not only booked but paid for. Many first-, second- and third-tier rate cards are the products of a mature valuation process that sets a very basic limit in the marketplace: the absolute most anyone will pay per unit. The inverse is also true: representing the exact amount no media buyer with any client money will ever pay. According to this perspective, the cost of almost all rate card media is almost always indeterminate, and remains so until the seller and buyer make the deal and, in so doing, declare it otherwise. 

It was generally agreed that the auction environment isn't right for every occasion, but a common belief is that there is nothing fundamental in media to prohibit a viable auction environment for it. 

The TV networks and Google were regularly referenced as evidence that a media auction marketplace could work for most media, and are signs of things to come.

Now, I appreciate that there is a living to be made by promoting the concept that auctions in all instances are the mother’s milk, but, really… if it was such an appealing economic model for all transactions at all times, we’d be going to the 4-H hog show to buy Coca-Cola and television sets, not the grocery store or Circuit City. Can any product or service be SUBJECT to an auction? Yes. Is that sensible? Not in the least.

When I reflect on statements like “you’ll see; one day all media will be bought and sold like AdSense on Google”, I think… yes… and soccer will one day dominate U.S. sports and we will all be going to work using jet packs. It’s the kind of thing that is regularly stated. And, yes, one day you will be right when you say, “I told you I was sick.” Even a broken clock is right twice a day. Are all of these things POSSIBLE? Yes. Are they PROBABLE? No.

Although the value of media might be considered at all times “indeterminate” from the ethereal perspective made possible from beyond the marketplace, some media actually DOES have value. The programming one watches, the signal transmitted, the administration of its delivery, the film it is shot on, the pens and pencils used to write teleplays and draw up story boards… all that stuff costs money. And all of that figures into the base value of the output. Just because that output isn’t something you can squish between your fingers doesn’t mean that its value remains in some state between life and death like Schrödinger’s Cat. Marketplace values are both a function of costs of material, as I wrote in my column, and the perception of the marketplace. So long as there is material cost, even if the product or service doesn’t have “value” it will still have “worth.”

I hesitate to say that just because Google is successful, ALL auction marketplaces are good ideas. Just because Mussolini got the trains to run on time doesn’t mean fascism is a good idea. All poodles may be dogs, but not all dogs are poodles.

There are many things that have different values to different people at different times. A crate of baby formula is of no value to a 20-year-old single male college student, for example, but has worth for a mother weaning her baby. And CBS Marketwatch inventory doesn't have the same value for a DR advertiser as for a luxury auto advertiser.

Jim Meskauskas is media strategies editor for iMedia Connection.