Three global ad firms team up to modernise sales

Three of the largest global advertising companies are forming a consortium to cut the costs of bringing buyers and sellers together in the chaotic and expensive world of ad sales.

In an announcement yesterday, Interpublic Group of Companies and Omnicom Group, and WPP Group PLC said they are joining to create a Web-based software application that will cut out costly faxes and excess paperwork when advertising buyers and sellers negotiate sales contracts.

Michael Lotito, who has been named CEO of the new, as-yet-unnamed New York-based company, said he's confident the needed software will have to be developed, a process expected to take about a year. The new company plans to begin operations in the second quarter.

No decisions have been made on what company will be hired to develop the system, he said. Additional advertising and marketing companies will be invited to participate in the project.

Lotito said he envisions a Web-based interface that will allow ad buyers and sellers worldwide to speak with one another online or over the phone, while being able to simultaneously browse and negotiate contracts in real time on their computer screens. When an agreement is reached, both sides will be able to click an on-screen button to confirm and finalize the deal. Presently, the labor-intensive back-and-forth exchange between ad buyers and sellers is done through a series of costly long-distance faxes or overnight deliveries via couriers.

"When the economy is difficult, isn't that the time you reduce costs?" Lotito said. "That's why it makes sense."

No single company could afford to build such an infrastructure alone, he said, which is why the three rival companies are partnering to create it.

In a joint statement, the leaders of the three companies, John Dooner, chairman of Interpublic; John Wren, chairman of Omnicom; and WPP Group CEO Martin Sorrell, said, "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."

The new system "will both improve service and cost efficiency to our clients and simultaneously benefit media sellers," they said.

Lotito was formerly president and CEO of Initiative Media North America, which is owned by Interpublic.

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