An eBay Model for Media?: Why Auctions Aren't Suitable For All Products

[mandy]

Article talks about auctions for advertising media buying, but it also contains statements that are relevant to auctions for any type of product or service.

...why the auction marketplace can't always work for media planning and buying.

...But auctions are helpful really only when the value of a product is indeterminate, when neither buyer nor seller has a real sense of an asset's innate value...

The problem with auction-based marketplaces for intangible product such as media is its susceptibility to the irrational exuberance and hysterical whimsy of human passions. A mixture of limited inventory, greater fool theory, and the incorrect predictions of any audience's content consumption can lead to an illogical attribution of value.

full article: http://www.imediaconnection.com/content/8193.asp

[mandy]

A followup article:

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.

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.

full article: http://www.imediaconnection.com/content/8333.asp