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March 20, 2007

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Sumit Chachra

From what I remember, spot runner uses Microsoft technologies extensively. If you look at their job postings its very apparent. This fact itself makes them unattractive to both yahoo and google.

They have a lot of ex-Yahoo execs too. So should be easier to pitch to yahoo.

Microsoft would be the most probable, followed by yahoo and google. In the end it may not be about technology at all... but hey thats my 2 cents! :-)

King Troll

Damn Henry you know I been talking about SpotRunner and how id use them for my business. You better give me credit for that shit bro. I give you a small biz perspective and you brush me off.

On another note, you get with that Julie!?

The future is now or coming soon to a Theater ner you.

Henry, Henry I thought you stopped hyping stocks on perception... Let’s take a look at your comments regarding SpotRunner.
1. They reduce production costs from over $500,000 to $499... WOW. The reality is that local cable ad groups have producing inexpensive creative for years. Creative is not the gating factor for local advertising on cable/tv it is the cost of media. We’ll get back to that later.
2. Thousands, millions, billions of new advertisers will come to TV because of this new revolutionary concept, cheap creative. They will come but will they stay, remember the cost of the media. We’ll get back to that later.
3. New revolutionary tools that reduce planning from up to a year to 24 hours WOW. Like point 1 this is an apples to Nike comparison. Nike needs months to plan their media executions. What medium(s) to use. What weight to put against each brand. So on and so on. That takes months... Now the local advertiser... I have X dollars and this is my customer... There are several programs that have been used for years that will produce schedules in minutes, not even the earth shaking 24 hours mentioned by Henry.
It is the cost of the media. Local cable ad sales groups sell advertising on up to 100 networks at a time. The measurable (Nielsen) networks fall of after the top 15 or so. What you are left with are mostly small niche networks with tightly targeted demos. That is the bad news for local advertisers. In order to achieve any reach they need to buy deep, use multiple networks, and have heavy frequency because at any point in time these networks have minimal viewership. Buying lots of spots costs… It is the cost of media. The real driver that will be truly addressable TV advertising where advertisers can buy only people who are their targets not spots... That will enable local cable to monetize all viewers one by one, not spot by spot.
SpotRunner may seem cool in a techy kind of way but remember where there is smoke there is smoke.

Mardi Lamb

I agree with "The Future is Now" in saying that the cost of media will be the real stumbling block. Ad creative for small businesses can be cheap. One ad agency, BareNakedAds.com, even offers their creative for *free* when advertisers buy one of their airing packages (and the creative is ready in 24 hours). Another one, Cheap-TV-Spots.com, sells air time at the network rate without additional fees, whereas Spotrunner says on their site that they add on a percentage to all air time rates. So Spotrunner lures in a small business with some template-made creative, then puffs up the media cost on the back end. It says so on their own website. I can't imagine a small business with a limited budget sticking with that kind of inflated media cost.

The business model of Spotrunner just seems like this thing designed to appeal as a takeover target for a big company like Google, who, in turn, may be so worried about stock prices that they have to keep expanding indefinitely, even into fields they know nothing about like radio and TV.

And then there's this:

"It allows hundreds of thousands of local businesses and franchises that would never have been able to employ TV advertising in the old media world to do so--and target the campaigns by zip code."

What baloney. Targeted TV was NOT invented by these guys! Small businesses have been using local TV for decades. Anyone who's ever bought local TV ads knows that It's been the norm to target campaigns down to the zip code for many years. I suspect the reason this concept of targeted local TV advertising dazzles people is because most of them have never owned a business and bought their own TV advertising.

One thing's for sure - if they clog up the TV airwaves with all those cloned commercials, I'm definitely getting TiVo... unless Google buys them, too.

Henry Blodget

Thanks. Good points (and I have updated the post accordingly).

Please clarify what you mean about the real issue being the "Cost of media". The cost of the actual air-time? I assume (but this is my assumption) that Spot Runner gets volume discounts that local businesses would not get. The question, therefore, is whether these discounts are more or less than one would get with a traditional ad network.

Based on the presentation, I also gather that the scheduling, payment, and reporting process is far simpler than it would be if one went to the cable cos individually. Is this not true?

Has anyone out there bought TV advertising through Spot Runner AND the traditional way (or bought through Spot Runner because they couldn't justify it the traditional way?) Please weigh in so we can get to the bottom of this.

Henry Blodget

Here's a Comment of a week ago from frequent-reader King Troll, who has a local retailing business. This was submitted before my Spot Runner post. After rereading it, I agree that KT deserves credit for the Google-to-buy-Spot Runner concept.

KT, please explain why you use Spot Runner, whether you bought TV advertising before, how (if) Spot Runner is better, etc.


"Henry i tried that new video ad service from SpotRunner. I think we will be using them for local video ads for my stores. I dont like their selection of commercials for my stores but they are perfect for my friend's restaurant.

I dont get why Google doesnt get into local video ads/commercials. There's a whole slew of small business like myself that would advertise ($2000/month video, $2500/month radio, 1200 /month billboards). I always thought tv video ads were expensive. I didnt know they were that cheap.

Although i hate supporting web 2.0 companies. I will be using Spotrunner. Until google launches one that is."

King Troll

Henry, we never bought TV ads. We just never bothered to look. Stuck with Radio, fliers and billboards. We always figured TV and print were way beyond our budget. After reading the SpotRunner article in Business2.0 (Fuck you "1 and 1" 20 page bullshit ads), I tried the service and was blown away.

Now people are saying the ad rates are expensive, well fuck me bros that doesnt seem expensive to me. You can select the channel you want, location and everything without dealing with shady sales reps. Maybee we're ignorant in this field but it seems no more costly than Radio (we use Radio One), plus you get a nice commercial.

Now what those fuckers should do is start targeting their commercials to different demographics and get some celeb endorsements for a premium price. I don't sell tuxedos fuckers. I sell brands like Lacoste, LRG, Adidas, DC... Let's get a better selection of commercials.

The future is now or coming soon to a Theater ner you.

First off sorry for the cheap shots in my previous post.."The cost of media" is indeed air-time. As to your other issues it is not SpotRunner technology that allows ads to run in small geo areas. That is done by the insertion equiptment (see C-Cor and SeaChange). SpotRunner needs to negotiate with operators for their air-time and I know of no bulk deals out there.If they are able to buy bulk inventory it will only be for the unrated networks I mentioned in my previous post. Another company allows for on line ad customization ( see Visible World) so even this is not a new idea.
The companies that will allow true addressability, buying people not spots, will be the real winners. The viewing waste of one advertiser are true targets to someone else.. ( see INVIDI Technologies)

The future is now or coming soon to a Theater ner you.

First off sorry for the cheap shots in my previous post.."The cost of media" is indeed air-time. As to your other issues it is not SpotRunner technology that allows ads to run in small geo areas. That is done by the insertion equiptment (see C-Cor and SeaChange). SpotRunner needs to negotiate with operators for their air-time and I know of no bulk deals out there.If they are able to buy bulk inventory it will only be for the unrated networks I mentioned in my previous post. Another company allows for on line ad customization ( see Visible World) so even this is not a new idea.
The companies that will allow true addressability, buying people not spots, will be the real winners. The viewing waste of one advertiser are true targets to someone else.. ( see INVIDI Technologies)

Stome

This company is all hype no substance. Did they talk about their revneues?

Jon Kelly

I was in the audience for Nick's speech. I have to admit I was pretty impressed with what they are doing (or just with Nick's speaking ability, probably that). But, the thing that kept nagging at me was whether this is an opportunity that would have made a lot more sense if the technology was available 10 years ago. Yes, TV ad revenues are still up each year, but for how much longer? Now that even the big, slow TV networks are putting their shows online, now that Apple, MSFT, every cable company, etc. will be pushing DVRs, just how much longer is the 30 second spot going to be valuable? I have no doubt the content producers will find a way to monetize good shows, but it feels like we’re very close to a tipping point on widespred ad avoidance for the standard spot.

pwb

re: UPDATE #1, there was internet advertising before AdWords, too.

The future is now or coming soon to a Theater ner you.

final thoughts on this topic and a reply to pwb.. television as an advertising medium has been around forever and is in desperate need of change.. adwords entered a new ad medium and was able to effect dramatic change becoming the internet mousetrap because there was a huge hole to fill. TV is facing dramatic changes and creative is part but not the reason revenues have become flat.. AdWords is one reason. focused and relevant commercials have made the internet the new gold cost for marketers. TV needs to addrress this issue or all the new cheap creative will not matter.. Advertisers are insisting that TV become more like the web with ability to deliver messages to individual customers.. The TV model today forces you to buy spots and all viewers whether they match your consumer profile or not. There is no way that you can match the web's ability to control reach and frequency to consumers.. Everything is an estimate.. The only company that I have found that seems to have the ability to deliver messages to individual viewers seems to be individ technologies.. To sum up: TV needs better and infinetly imroved delivery methods then they can worry about cheap creative.

Valeman

Hi Henry:

On a different topic re Google. I noiced that I was allowed to modify the banner area of my home page (form a collection of 5-6 themes). The banner area changes (i.e. becomes bright to dark)as the day progress. The page is starting to look more like a real portal now, esp when you add weather, email, other sections like news, jokes corner etc.

Any comments on where this might lead them? A more head to head w/Yahoo is an obvious conclution..

Thanks.

stone

Rumor has it that many of the TV ads are actually MAILED to the TV station, not transmitted electronically or otherwise.

Plus, there's no chance that these ads actually work well. They'll worse than DRTV because they're not crafted for effectiveness, rather, they appear to be crafted for "look and feel".

King Troll

Are you stone philips? Bro sometimes id like to punch you right in your fucking mouth.

PhunnyFranchise

I agree with Stone. The Spotrunner template ads seem like they are just made to sell you - not to be effective. And when you stop airing with them they can rent the same ad that you just branded yourself with - to your competitor in the same city. Brilliant! But a custom-made Cheap-TV-Spots.com ad will not only be more effective in branding (because they're custom crafted) but are very likely to yield more spots per given budget than Spotrunner because Cheap TV Spots won't add fees to the network rate. Spotrunner itself indicates that Spot Runner will add fees to the network rate in their own documentation. There are other differences between these rivals. There are no restrictions on where a custom-made Cheap TV Spots ad will air: local, national or international or via e-mail. A flat rate CheapTVSpots ad and air time will be a higher quality and lower overall cost than Spotrunner because of Cheap TV Spots 6 years experience online and that they won't tack on fees to the air time. Cheap-TV-Spots is the original, and the first international online TV ad agency - and is faster, delivers higher quality, and is cheaper than this overly-hyped johnny come lately. That's my opinion and I'm sticking to it. And no, I don't own stock in either company.

kabababrubarta

Good site! kabababrubarta

The future is now or coming soon to a Theater ner you.

Well Hank what do you tink now

DanSing in the Dark

First, thanks very much King Troll for sharing your perspective on buying local media. The ad buying decisions that you and other operators of small and medium businesses are making are the key uncertainty relating to the development of local TV advertising, and it's not easy to get unfiltered feedback.

Networks, affiliates, and MSOs (ie cable operators) are all confronting an obvious problem: now that online gives better targeting and measurement to advertisers, will they shift spend from TV to online? If they do, how can TV respond to retain that spending?

As "The Future" points out, MSOs have offered geotargeting for many, many years. Somewhat surprisingly, advertisers don't buy it that often. Most spend is still DMA-wide. So if online is so attractive, why haven't advertisers already taken more advantage of existing TV targeting capabilities? There are many reasons, including:
--High production costs for TV spots and airtime, plus the complexity of the buy, intimidate many local businesses. Many of the folks you see advertising on cable (e.g. restaurants, rug stores) are doing it as much for vanity as for effectiveness (it's fun to see yourself on TV).
--Most advertisers think you need an agency to develop the creative or manage the buy, and the spend is too small to interest the agencies.
--As "The Future" pointed out, there is effectively no measurement at all for unrated networks. Ad-skipping makes the problem worse.
--MSOs only cover 50% to 65% of households in a DMA. Neither DBS nor over-the-air can offer geotargeting.

There is a lot more to be said about whether and how TV can be effective for local advertisers of different sizes and categories, and especially how TV can develop targeting, interactivity, and measurement capabilities comparable to online. TV can and will, but it is an entirely different subject. The discussion here is about whether SpotRunner brings something distinctive in the meantime and therefore can build a big business intermediating between advertisers and MSOs/broadcasters/DBS.

I think there is, but it isn't what most people assume when they draw analogies to Google and AdWords. SpotRunner cannot control the pricing of the airtime nor the execution of the targeting and measurement. In contrast, Google controls the entire online experience for users of Google.com, and the pricing and selling of the paid search ads alongside.

SpotRunner's role can be to create an efficient sales channel to reach small and medium sized advertisers who are too small to support the cost of a rep (or an agency). The question is whether software can adequately replace humans for the tasks of 1) building an ad, 2) planning media, and 3) executing the buy. There is no a priori way to answer those questions--we need to see how advertisers like The King react to the usability of the site, the quality of the creative, and the pricing of the air time and the service overall.

So I wouldn't focus too much on where the service charge is hidden--it could be an upcharge on airtime, a charge for the creative, a subscription fee, or in the form of rebates the advertiser doesn't know about. Whichever emerges as the winning revenue model, it's pretty easy to copy. The hard part is creating effective, usable tools and getting the advertiser base to critical mass.

Henry, my guess is that the last task will be expensive and slow for anyone but Google (and probably Google too). At least Google has awareness among SMEs and an existing relationship with the advertiser (to the extent they buy keywords, which many do).

Medaglia

Very interesting post--thanks. As an aspiring commercial director, it's useful to have a customers point of view.

You want to know why the quality of spots on spotrunner are so, um, low? After producing a spec spot, I checked into selling it to them. here's the sweet deal they give to commercial producers:

You sign the agreement and send them the spot, granting them EXCLUSIVE rights to it--meaning you can't sell it to anyone else. Every time a customer chooses it, you get--now brace yourselves--one hundred bucks...

For every $5000 the customer spends on media you get another $100...

if you're lucky, say 10 customers choose your spot and spend $8K on media each. that means you just made a whopping $2000. so for you to make a profit, your entire production cost has to be under $2000. Most wedding videos cost $500-$5000.

so i decided not to send them my spot.

medaglia
http://prettypictures.com

akenna

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