Spot Runner Takes a Stab at Streamlining Media Buying

NEW YORK By Spot Runner’s count, a typical media agency can send 7,000 faxes a month to buy and sell advertising. The cost in manpower (and brain cells) wasted because of this mind-numbing mainstay: incalculable.

The Los Angeles digital ad-system company wants to change that with a digital ad-buying platform called Project Malibu. It’s preparing to join several firms, including heavyweights Google and Microsoft, in trying to bring Web-style dynamics to the old-school ad world of TV buying. The trick: getting broadcasters and agencies to buy into changing a system in place for decades.

“We’re dealing with an industry that’s fairly antiquated,” said Nick Grouf, CEO of Spot Runner, which plans to introduce Malibu this summer. “We’re hoping to use technology to accelerate their path to an addressable world.”

The company is courting broadcasters and media agencies with a pitch that Malibu will cut waste from the buying process without harming agencies or broadcasters. As Spot Runner lays it out, Malibu tackles five parts of the media process: finding inventory, placing orders, delivering creative, trafficking spots and analyzing the results.

It hopes to attract both direct marketers and brand advertisers with a system that matches buyer and seller. It will do so without requiring them to bid in an auction or target only by demographics without knowing where their ad will appear. The system theoretically would make it easier to run targeted campaigns and cut down on waste.

Spot Runner is one of several technology companies looking to tackle the legacy systems, including phones and faxes, that still define media planning and buying. The catch, of course, is there’s a reason the old way has persisted so long: neither side has been in any rush to change it. History is littered with examples of companies, like eBay and Enron, hell-bent on modernizing the buying and selling process of old media, only to limp away in defeat.

“[TV advertising] is almost a handcrafted industry,” said Mark Rosenthal, the former IPG Media chief who is Spot Runner’s president of media platforms. “Some of it is plain fear of technology and some of it is the idea their work is so personal that there’s no way technology can replace it.”

Their arguments are similar: there’s too much inefficiency and too little technology in the system of matching buyers and sellers. This is exacerbated, Grouf argued, in a complex media world where the number of TV networks has gone from 11 in 1980 to more than 125. What’s more, Internet video is opening additional options while adding to the glut of inventory available. In an economic recession, there is impetus to change, he said. “When things aren’t broke, you don’t fix them,” he said. “The world we’re in today is a very different world.”

There are parallels of other industries, like financial services, that have relied on antiquated means while arguing about the primacy of relationships in what they do, only to adopt technology to drive efficiencies. “It’s pretty clear that marketplace dynamics will absolutely come to the media industry. The intensity is debatable and probably varies by medium,” said Tim Hanlon, managing director at VivaKi, the Publicis Groupe digital unit.

The big challenge for Spot Runner, like Google and others, is assuring both media owners and buyers their interests will be protected. The biggest fear of technology platforms: they’ll commoditize inventory, treating programming as equal so long as the data shows there’s a particular audience there. On the agency side, the systems must prove to be an advantage for large advertisers and brand campaigns, not only smaller advertisers and direct response.

“When you take major packaged-goods advertisers that spend a ton of money, we have to figure if using this is even possible,” said Donna Speciale, president of investment and activation at Publicis Groupe’s MediaVest. “This might be one way to purchase some type of inventory. It may not be a way to purchase all of the inventory in all campaigns.”