Why Bid4Spots Was Created

There are 11,000 commercial radio stations in the United States. Each one broadcasts 24 hours a day with an average of 12 commercial ad units available for sale every hour. Presuming that most stations have, on average, at least 20% of their inventories unsold during most broadcast weeks, 633,600 commercial ad units go unsold every single day of the year in America!

Why? Why couldn’t radio stations find a way to monetize that inventory? This was the question that ad executive Dave Newmark posed to radio stations in 2004 when a client of his was interested in purchasing remnant radio spot inventory. Dave discovered that discovered that radio stations didn’t want to hold “fire sales” every week for fear that this would ruin their regular rate integrity. So, instead, radio stations would push those unsold ad units back to the programming department to play more music or air more talk.

Dave believed there had to be a way to help stations get money for those unsold spots and advertisers access them at low rates. He just didn’t know quite how that would work. One night, while watching his son make a purchase on eBay, he thought to himself, “why not do an online auction for the unsold radio airtime”? Doing some research, he discovered that this was not a unique idea. In fact, many companies, especially during the dot-com boom years had tried this approach and in 2004 they were all gone. Why didn’t the online auction model work? Dave continued to ask more questions and, during a conversation with a software programmer friend of his, he realized what everyone had missed: they simply had the auction model backwards! Why push the prices up in a “forward” auction like eBay? No advertiser wants to pay the highest rate, especially for last-minute ad buys.

So, Dave and his ad-executive partner and wife, Patty, went to several radio executives to float a radical idea: would their stations participate in a live, weekly online REVERSE auction? A reverse auction has one buyer (the advertiser) and multiple sellers (the stations) bid the prices down and the lowest radio rates win the advertiser’s money. The radio community said they would with one condition: the rates must be kept confidential. Dave and Patty agreed to this and Bid4Spots was born!