The relationship between national TV sales reps and major ad agencies just got easier. Strata Marketing, a major software provider, rolled out the Electronic Data Interchange (EDI) system late last week.
EDI allows contracts to be sent electronically, making the sales process more accurate, timely and efficient. What sets the system apart is its open-standards orders, which are compatible with any station’s system or software.
“This is huge for local broadcasters,” says Abby Auerbach, executive VP of the Television Bureau of Advertising (TVB), a trade association that includes TV broadcast groups, ad-sales reps, syndicators and stations.
“These are true, open-standards orders, and that’s very important,” she says, noting EDI greatly reduces the chance of errors.
In fact, TVB estimates that 70%-80% of all TV-spot invoices are discrepant. This can result in payment delays or makegoods. Automating the route and eliminating the fax speeds up the process, says Auerbach. “It also creates an electronic version of the paper trail, making the auditing process easier.”
Typically, sales orders are sent between the ad agency and national TV-spot rep firms (representing stations) on paper, via either fax or mail. Using paper increases the chance of mistakes, since the information must be keyed in repeatedly by various personnel.
Keep profitable
“For us, the real issue is our customers are working with profit margins that have fallen from 15% to 4%. If we can help them to be more profitable, our clients win,” says John Shelton, president and COO of Strata Marketing, which is used by more than 700 advertising and media-buying agencies nationwide. “Doing their jobs faster and better is more important when the margins are smaller.”
The EDI system begins with the buyer sending TVB’s XML-based version of the contract to the rep firm. Thanks to EDI, the buyer immediately gets a return e-mail acknowledging that the contract was received. Previously, it was common for faxed orders to be misplaced or lost. Now the data received by the rep firm is automatically inserted into an account executive’s relevant worksheets and programs.
Ease of operation
Because the system embraces open standards, Shelton says, any of the 2,000 media buyers in the country can use the EDI system. (He estimates that about 500 small buyers don’t use computers for their work.) Auerbach sees this as an important step forward for EDI: “If everybody who is doing business together is speaking the same language, then the backroom process can move efficiently.”
That is a big change from what Donovan Advertising and Marketing Services and Encoda currently offer: Known as the DARE (Direct Agency Rep Exchange) system, it allows Donovan agencies and reps to send orders, makegoods and revisions back and forth. The catch: It is a proprietary system.
“Even though 10 of the 11 major agencies, like MindShare or Zenith, use Donovan for buying, there are still many agencies that do business with reps who don’t use Donovan,” says Auerbach. “Half of the orders the reps get are still coming to them on paper.”
System needs tweaking
EDI is finding its way into the mid- to upper-level buying firms, like Horizon Active, Corinthian and Icon International. Bob Schindele, Icon International director, media services, says his company will quickly embrace EDI.
“Our goal is to get as much done electronically as we can in 2005. Our business keeps growing, and EDI will help us keep those costs down.
“Ultimately,” he adds, “we want all documents to be in XML and go through an Internet-based service so every agency can reach every rep firm or TV station, regardless of what system they use.”
The system in its current form isn’t ideal, since it relies on e-mail to send an XML document back and forth. Ideally, the process could be streamlined by sending data directly into the systems’ databases. Auerbach says work is already under way on the next-generation system.
TVB moves forward
To aid that effort, TVB’s EDI committee has split into a national and local version. The national group will help non-DARE agencies get involved with electronic orders; the local team will assist in fostering open-standards connectivity for direct-to-station orders.
“This will affect small and midsize agencies that work with the TV station,” says Auerbach.
TVB is working on a similar open-standards system for the rep-firm/station relationship to resemble the advertising version. The goal is to eliminate the need for paper confirmations.
