Agency Groups Get Jump On Google-style TV Ads

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, espeically 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.

In doing so, the ad companies hope not simply to get a return on their investment, but to better serve clients with a local presence and learn the ins and outs of a platform that some say could bring Google-like efficiency and accuracy to the $74 billion TV ad market.

Spot Runner plans to use the investment to quickly expand, such as extending its platform to both the radio and Internet markets, putting it squarely in competition with Google.

“We don’t want to miss this one the way we did when we said Google AdWords has nothing to do with us,” said Steve Hayden, vice chairman of WPP’s Ogilvy & Mather. “It has everything to do with us.”

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.

“We know that some of the changes that have taken place in search and online media will apply in TV over time,” said Mark Read, director of strategy at WPP, the holding company’s digital strategy group. “All media will become digital, so there will be no division between new media and old media.”

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.

Spot Runner is not alone in trying to make local TV advertising more like its Web counterpart. Outfits like Cheap TV Spots and National TV Spots both offer similar services. Other startups like Visible World hope to deliver household-level targeting of commercials. And a larger shadow looms from Google itself, which already has a self-service system for radio spots and has experimented with print media.

“Those have been the first ladder steps for us to move into terrestrial media,” said Pat Keane, head of sales strategy at Google.

While Spot Runner’s main business is serving small, independent companies, it has also been courting agencies in an attempt to include national brands with significant local outlets or franchises. It’s signed up to provide TV ads for Coldwell Banker, Century 21 and ERA customers. And national brand Orthoclear, the teeth-straightening treatment, is using the system to help thousands of dentists run spots touting the service.

A few WPP agencies already work with Spot Runner. JWT signed a partnership agreement with the company in July, and it has been at work crafting spots on behalf of client De Beers for local jewelry stores. Through Spot Runner’s platform, jewelers can choose from a half-dozen commercials touting diamond gifts, then customize them with local contact information.

And the company’s Ogilvy & Mather is using Spot Runner as a creative test bed for clients, something Hayden said could be a huge benefit, provided the upstart’s media placement system is not only robust enough to gain data on what is working, but agile enough to quickly shift creative to new markets. “If a double cheeseburger promotion works great in Cincinnati, will I be able to run that [in other markets] from my desktop sitting here at Ogilvy?” Hayden asked.

Neither IPG nor WPP agencies will get preferential pricing for their clients, said Grouf. Bant Breen, global director of strategic development and innovation at IPG, said the investment would help the holding company’s shops like Wahlstrom Group, which has clients that have strong local presences such as Ace Hardware and UPS. “We’re not going after the mom-and-pop market,” he said. “We’re more interested in figuring out how this is relevant for our franchise and co-op clients.”

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.”

If Spot Runner keeps its focus on building its platform and running successful campaigns, it will withstand the competitive pressure, said Roger Lee, general partner with Battery Ventures, a Spot Runner backer. “I don’t think it’s a winner-take-all market,” he said. “There’s a lot of room for big companies to participate and coexist.”

Grouf, who started and sold two previous Web businesses with fellow founder David Waxman, professes admiration for Google, which he calls “one of the most breathtaking businesses that we’ve ever seen.” But a key differentiator, according to Joe Ianniello, chief development officer at CBS: Spot Runner lets media companies set their prices, while Google’s model takes it out of their hands.

“We don’t want to just turn over our inventory to Google,” he said. “We want to get paid our fair share. We view this as an alternative.”