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Media rivals set up platform to pool ad inventory

Media rivals set up platform to pool ad inventory in bid to fend off global online giants

By Paul McBeth

Oct. 8 (BusinessDesk) - Rival media companies Fairfax Media, NZME, Television New Zealand and MediaWorks have set up a platform to pool their advertising inventory in an effort to stave off the encroaching reach of global internet groups such as Google Inc, Facebook and Yahoo Inc.

The four companies have set up an joint venture where they each own a quarter to offer media agencies and clients a platform to buy advertising time and space across all their publishing vehicles in one transaction. KPEX will launch next month, setting the reserve price for advertising in its inventory, though the ultimate price is set in a bidding process. The media groups will also sell advertising directly.

"In placing those bids, advertisers will weigh up the value to them of the centralised offer against their ability to purchase guaranteed advertising from each shareholder individually," KPEX chief executive Duncan Arthur said in an emailed statement. "Decisions on KPEX's reserve price - and other competitive matters, will be made by KPEX management (not the shareholders) acting in the interests of KPEX."

Traditional media companies have been wrestling with declining advertising revenue and have been slashing staff and rationalising their production to remain profitable. Advertising Standards Authority data show advertising turnover rose 4.2 percent to $2.39 billion in 2014, with interactive ads increasing their share of the total to almost 25 percent from 21 percent a year earlier. Television's share shrank to 26 percent from 28 percent in 2013 and newspapers slipped to 20 percent from 22 percent, while radio and magazines were relatively static at 12 percent and 8.9 percent

The Commerce Commission was notified of the joint venture yesterday, which have an exclusion under the Commerce Act provided certain criteria are met.

Arthur said KPEX will operate independently of its shareholders in setting the rules for participation in the exchange and on floor pricing for ads traded in the platform's pool.

"Shareholders will not have access to any pricing or other sensitive information relating to each," he said. "KPEX will provide an additional competitive alternative for New Zealand advertisers to Google, Facebook and Yahoo, and some advertising agency offerings."

KPEX said its initial advertising inventory will be sourced from its four shareholders, and will invite other local publishers to the exchange over time.


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