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October 30, 2006

One Hot Dog - InterPublic Group and WPP Group Bet on SpotRunner

posted by MR WAVETHEORY at 10/30/2006 02:47:00 PM

The big old ad agencies don't want to miss the next revolution in TV advertising and that's why they've jumped onboard SpotRunner. SpotRunner lets users buy and create TV advertising campaigns using a simple web interface. SpotRunner has boiler plate videos that can be customized. SpotRunner got some backing from major investors including The Interpublic Group of Companies, Inc. (NYSE IPG), WPP Group PLC (NASDAQ WPPGY), and Viacom (NYSE VIA).

Along with other investors, including CBS, IPG and WPP are contributing to a $40 million round of funding. Spot Runner, which has only operated since January, now has $60 million in backing. The company offers canned TV spots and a self-service system for planning and buying airtime, mostly from local cable companies. If Google's success has taught the marketing world anything, it's that advertisers are just as happy creating and placing their own ads as they are paying an agency to do it, especially if it means better targeting and greater results. Taking that lesson to heart, Interpublic Group and WPP Group have become strategic investors in Spot Runner, a startup that's bringing automation to the high-touch, expensive world of TV advertising.

How does SpotRunner work?

Using Spot Runner's system, clients choose from a library of thousands of stock TV ads, customized by adding voiceovers and local business information. Advertisers create a media plan based on the neighborhoods and demographics they are targeting. A four-week run can cost as little as $1,000 and be up and running in two weeks. Creative goes for $500. "That's a very different price point than you'd see to have a large agency make a 30-second spot," said Spot Runner CEO Nick Grouf.

Sounds good, but there are doubters.

While IPG and WPP execs believe Spot Runner has enormous potential, there are others who doubt it will ever move beyond cheap executions for unsophisticated businesses. Mitch Oscar, evp at Aegis Group's Carat Digital, questions if a Google-type system can work in a visual medium. "How can they make it look terrific for so little money and not have the consumers say, 'That looks inexpensive; I guess that guy doesn't care?'" he said. Even the company's targeting is not perfect, noted Tim Hanlon, svp of ventures at Publicis' Denuo: "They've figured out the creative part of it, not the media-targeting part."

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