Wednesday, May 28, 2008

I met my "frenemy"

WPP's Martin Sorrell uses a great expression to describe companies with whom we both compete and collaborate -- the "frenemy."

I met one today.  Spot Runner.

Spot Runner can create TV commercials for a fraction of the cost of a large agency and then geo-target the commercial to the right audience in the right location.  Their customers tend to be small local and regional businesses that cannot afford TV using traditional means, or orphaned brands within large consumer product companies.  The entire transaction is done through Spot Runner's website.  (Yes, we're in an era where the client/agency relationship can be described as a transaction.)

The collaborative opportunities within the frenemy relationship are using Spot Runner to support local dealers and franchisees with one-off tactical promotions, or perhaps for test marketing ideas before investing in a large-scale campaign.  

Will Spot Runner put advertising agencies out of business?  Thankfully just the really awful ones.  Not to be overly Darwinian, but the herd could be thinned a bit

2 comments:

Tom Scholnick said...

SpotRunner is crap. They've got oodles and oodles of VC money to keep them afloat without earning a profit whatsoever. I would be curious to hear from the actual businesses who use SpotRunner TV ads. I think their testimonial are far and few between. Not many businesses profit from TV commercials -- at least not like it used to be in the pre-internet and pre-cable TV era. But there are a lot of businesses owners who will like to boost their ego by running a TV campaign and therefore there will be a supply of "first-timers" to try it out.

Not even SpotRunner can monetize how much incremental income a business has generated from a TV Ad campaign. The fact is that it is nearly impossible to track the sales that come from TV-only campaigns.

And besides, SpotRunner probably earns a small mark-up for reselling a TV station's ad time. If this is around 4%, they're only earning roughly $100 on a $2500 ad campaign. They'll need *a lot* of $2500 ad campaigns running simultaneously across many cable TV markets to earn enough Franklins to just cover their fixed expenses. I don't think it's going to fly. If/when it fails and SpotRunner misses the profitability that the VC investors are hoping it will earn, they will just liquidate and Google can snap them up cheap!

Anonymous said...

I think Spotrunner's out of the running. Lay offs, rumors of bad morale, executives leaving and generally higher commissions for air time may be holding them back. I don't think the disingenuous hype from bloggers that are also investors can keep a pump and dump ship afloat in this economy. Not everyone is going to drink the Spotrunner/WPP kool-aid when dollars are scarce. Cheap TV Spots does a much better production and does not charge additional commissions for air time. Against increasing awareness of this fact, Spotrunner cannot compete against CheapTVSpots or any other legitimate NY or L.A. agency.