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Bid4Spots Inc. — Dave Newmark

As you know, eBay chose Bid4Spots to power the eBay Media Marketplace for radio. For radio stations, this means more available advertising dollars in our reverse auction marketplace.

(click thumbnail)Dave NewmarkQ. What new products or services does Bid4Spots plan to promote at the fall Radio Show?

A. Our new partnership with eBay is an exciting milestone for us. As you know, eBay chose Bid4Spots to power the eBay Media Marketplace for radio. For radio stations, this means more available advertising dollars in our reverse auction marketplace. Everything else about the auctions is the same – radio stations still have a flexible, no-risk way to sell last-minute inventory that otherwise would have gone unsold.

Q. What data can you share that gives us an indication of how successful your partnership with eBay has been?

A. Our reverse auction model has been embraced by advertisers and stations alike. We experienced a 300 percent increase in activity in June, and our roster of participating advertisers and ad agencies grew by 15 percent — for a new total of nearly 1,800 advertisers and agencies combined. We also now have roughly 2,400 participating radio stations in all 300 top-ranked Arbitron DMAs.

Q. Some observers have worried that auctions would drive spot prices down. You’ve said no. Why?

A. We deal in last-minute inventory only — airtime that otherwise would go unsold. It’s really a different segment of inventory. When we were investigating how to build a last-minute solution that would work for both sides, we worked closely with broadcasters and we purposely structured our system with their concerns in mind.

Our reverse auction model enables broadcasters to sell last-minute airtime without risk of devaluing spot inventory. Stations can opt in or opt out at will — there are no contracts or long-term commitments. In fact, they can retract bids at any time before the close of an auction, enabling them to continue to try to sell their airtime on their own for the highest rates possible. We use a ranking system to determine rates based on CPM, so stations’ rates always remain confidential. It’s impossible to drive rates down when the rates are unknown. Additionally, advertisers cannot specify stations — if advertisers want to run on a particular station, they must place a scheduled buy.

Our experience has been that our reverse auction actually brings stations brand new advertisers — companies that have never considered radio in the past. They’re able to test the medium through us at very low risk, and after seeing how well radio works for them, they often move on to place scheduled buys directly with the stations.

Q. Are there other perceptions you’ve had to fight to change?

A. Yes — that a reverse auction only brings low rates. That’s simply not true, because not every advertiser is in it for the lowest rates possible. It depends on the company’s goals. For example, we have an advertiser that is seeking a specific audience demographic and is willing to pay whatever rate it takes to reach that target market. With Bid4Spots, the advertiser is able to submit the request for airtime and let our system do the work. This company pays relatively higher rates and is thrilled with the results.

Another misperception right now involves political rates. Because the FCC hasn’t decided its position on whether or not online auctions will affect radio’s lowest unit rates, some stations believe they can’t use Bid4Spots during a political window. But that’s not true. Stations that want to play it safe can use their lowest unit charge as the lowest bid.

Q. What is Newmark Advertising and how does it relate to Bid4Spots?

A. Newmark Advertising is an endorsement radio agency run my wife, Patty Newmark, and me. My father founded it in 1968 as a full-service agency for Los Angeles-based clients. Today it’s focused exclusively on endorsement radio. I am the CEO of both Newmark Advertising and Bid4Spots, but that is the only connection between the two companies. Patty and I work as close partners within Newmark Advertising, but with Bid4Spots it’s different. It’s a technology company that we both own, but I’m the active executive on the Bid4Spots front.

I followed my father into radio with the family business, and I’ve been in radio advertising now for more than 27 years. Patty studied psychology and joined me at Newmark Advertising to build the specialty in endorsement radio — turning the company into the nation’s leader in the field, helping to bring an estimated $100 million in advertising revenue to radio stations over the years.

In 2004, one of our advertisers asked us to look into a better system for buying last-minute radio airtime, and by September 2005, we officially launched Bid4Spots. I truly believe that our relationships within the industry have been a huge factor in our success. We worked with stations and advertisers to design the system that would be embraced by both sides.

Q. What are the most common questions or concerns you hear from your radio clients?

A. The question we hear most often is, “What can I do to win?” We have a dedicated staff to answer all of those questions and to offer strategies for winning the advertisers’ budgets. One of the common mistakes, which probably prompts the question in the first place, is that stations worry about getting locked into a low bid so they set their bids too high (with the intention of lowering them as needed). But we designed the system to automatically look for the highest rates possible, so broadcasters can cover themselves by entering their lowest bids without fear of being locked in.

Q. What are the most notable trends affecting radio buyers in your part of the business, or new directions ahead for Bid4Spots?

A. Advertisers and agencies have so many choices today of where to spend their money, and radio has to compete with that. But I’m optimistic about the viability of radio advertising. There’s more and more innovation in programming, less centralization, and more local programming, which is all good for the industry. Many advertisers are telling us that the ROI in online advertising is shrinking, so they see radio as an attractive option.

As for Bid4Spots specifically, we’re excited about the eBay Media Marketplace. We’re also about to hold our first auction in the UK, and late last year we launched our marketplace for independent Internet radio, giving us three distinct marketplaces in just two years of operation. We’re very excited about what’s to come.

Q. Where are you based, and how many employees do you have? Anything else we should know about your company?

A. Bid4Spots is based in Encino, Calif. It’s difficult to give a number of employees, because we have people working with us from around the world.

I want to offer a sincere “thank you” to the entire radio industry, from both Patty and me. Thanks for the tremendous support for both of our companies. We remain dedicated to the vitality of the radio business in America. We consider it our life’s work.