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Spot Runner Raises $51 Million To Expand To New Markets
The first rule of Startup Club is take the money when you can. Spot Runner CEO Nick Grouf understands that, which is why he just raised $51 million in a C round from a group of strategic investors that include the Daily Mail and General Trust (DMGT), Grupo Televisa, Legg Mason Capital Management, and Groupe Arnault/LVMH. And that’s on top of the $60 million in venture capital he raised in 2006 from a laundry list of A-list investors (Battery, Index, Allen & Co., Capital Research and Management, CBS, and Lachlan Murdoch), some of whom ponied up again this time. Surely, he didn’t burn through his cash already? Grouf says:
No, we were not running out of cash. This was an opportunity for us to build out a bit of a war chest that we will look to use in investments to expand our platform beyond just television and online but into other media, as well as expansion overseas, and acquisitions.
Basically, the money was there, so he took it. Grouf wouldn’t specify Spot Runner’s valuation, but when I asked him if it was higher or lower than the $250 million guesstimate that Silicon Alley Insider recently put out, he laughed and confirmed that it was higher. I’d hope so, with $110 million invested, it should be closer to a $500 million valuation.
If Grouf wants to expand to markets overseas, this group of investors should be able to help. The Daily Mail and General trust is one of the largest media companies in Britain, with papers, Websites, and radio stations. Grupo Televisa is one of the largest media companies in Spanish-speaking countries, with TV channels, cable and satellite services, magazines, and radio stations. And Arnault/LVMH owns one of the biggest collections of luxury brands in the world (Moët & Chandon, Hennessy, Louis Vuitton, Givenchy, Donna Karan, Sephora and TAG Heuer).
Spot Runner automates and the buying of regular TV ads for bothe local and national businesses. Both the creation and placement of the ads is all managed online. Grouf wants to expand beyond TV advertising. Last March, he bought Weblistic, which helps small, local businesses run online ad campaigns. Grouf is already dabbling in radio ads, but wants to ratchet that up, and move into print ads as well.
He’d better move fast because Google has some of the exact same plans—although Google admittedly doesn’t yet have much to show for its TV, print, and radio efforts. Grouf wants to scale up before Google gets serious.
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Google’s AdWords for TV Comes Out Of Beta, But Is Still Hamstrung
Since last June, Google has been piloting a test with advertisers in private beta to put regular 30-second video commercials on TV in an automated fashion through AdWords. Today, Google is opening that program up to all advertisers and even offering a $2,000 promotional credit towards creating a professional TV commercial.
I love how Google fails to mention anywhere in the announcement that these ads will only appear on the Dish satellite TV network, the only TV service that will allow Google to put its tracking software on its set-top boxes. The cable companies don’t want Google touching their set-top boxes, which is why they are collectively funding their own competing Project Canoe to the tune of $150 million.
Meanwhile, advertisers can already create and buy cheap TV ads across practically any cable network or local TV station through startup Spot Runner. Creating TV ads on Spot Runner is much cheaper, sometimes costing only a few hundred dollars. Google still has a lot of catching up to do in this arena, not just in reaching more TV homes but in better ad targeting. As Spot Runner CEO Nick Grouf told me about a month ago:
Google is not selling targeted ads now on TV. It is selling national ads through the smallest company in the satellite space. We expect them to become more aggressive, but have not seen it yet.
Give them time, Nick. They’ll get there.
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Just In Time For Campaign Season, Spot Runner Gets Into Politics
Political campaign season is upon us and that means one thing: really bad political ads on TV. There are 50,000 public elections every year in the United States. And an estimated $3 billion will be spent on political TV ads alone in 2008. Spot Runner wants to get in on the action, and maybe even raise the quality of the ads a little, by turning its self-serve TV advertising platform over to politicians. Today it is launching a political section of its site, where both national and local political campaigns can create TV ads for as little as $500 and run them in highly targeted cities and even neighborhoods. It has also assembled a high-powered political advisory board that includes former Senator Bill Bradley and political strategists Mike Murphy, Dan Schnur and Bob Shrum.
Spot Runner so far has focused mostly on making it easy for local businesses and national franchises to buy TV ads on both cable and network TV. To keep costs down, the company shoots different ads which can be modified by each customer, and lets them target the ads by neighborhood. The ad selection and media planning is all self-serve and automated over the Internet. Now the company wants to help level the playing field in political campaigns, especially local ones that may not have as much money for TV ads. CEO Nick Grouf tells me:
One reason we started Spot Runner was during the 2004 campaign we found out you can do better targeting using TV than the Internet. The two big barriers were the cost of creating an ad, and challenges around the fundamental media buying and planning that need to occur.
He believes Spot Runner has begun to solve those challenges. To start with, Spot Runner has created 22 generic ad templates that can be further modified, which cover issues ranging from taxes and education to immigration and leadership. Campaigns add video images of the candidate and tweak the script any way they like. Spot Runner will record the voiceovers. And if new footage needs to be shot of the candidate on the campaign trail or working hard in Congress, Spot Runner can supply the camera crew (in January it purchased GlobeShooters, a network of about 1,500 video professionals).
And then when it comes time to pick where to show the ads, Spot Runner has developed a sophisticated media map of the U.S. that lets campaigns target ads by age, gender, income levels, voter affiliations, and even history of campaign contributions. A campaign manager can choose to run the seniors ad in older neighborhoods and the education reform ads in neighborhoods with a lot of young families. Spot Runner also lets campaigns create fund raising ads that can be e-mailed to supporters.
To get a sense of what these ads look like, here is an ad for Peter Tesei, a Republican in Greenwich, Connecticut who won a recent local election for Selectman:
Here is the generic ad before it was customized:
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Spot Runner Acquires Weblistic, Seeks Synergies Between TV and Online Advertisements
Spot Runner, an online service that helps local businesses develop and run professional-looking advertisements for TV and radio, has acquired Weblistic, a company that helps these same businesses run online advertising campaigns.
The all-stock deal intends to produce profitable synergies between traditional and new media. As part of the announcement, Spot Runner is citing a Jupiter Research study claiming that TV advertising is the “number one impetus for people to search for a particular company or product online.” So the idea is that the acquisition of Weblistic will allow Spot Runner to set up more complete advertising campaigns for local businesses, ones that don’t overlook the Jupiter findings but rather ensure that TV and radio advertisement audiences find the follow-up information they seek online.
The team behind Weblistic has been working in the local online advertising space since the late 1990s and was actually responsible for YellowPages.com. Spot Runner co-founder David Waxman is confident that the company’s acquisition of Weblistic will give it a unique opportunity to serve local businesses. As he puts it:
We are going to be the first one to be able to offer an integrated marketing campaign to these local guys. When you marry television with online, television can substantially increase lift online.
Given Google’s predominance in the online advertising space, and its interest in television advertising, this acquisition should make Spot Runner an even more attractive acquisition target for them.
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Advertising Giant WPP On The Prowl For Acquisitions: Spot Runner, VideoEgg Rumored As Potential Targets
Advertising conglomerate WPP is looking to increase its Web advertising revenues through more acquisitions. Last year it purchased 24/7 Real Media for $649 million, and is currently making a run at Nurun, a Montreal-based interactive ad firm. But it may try to boost its Advertising 2.0 cred even further with more small acquisitions.
The NY Post, not always the most reliable source but pretty good when it comes to Madison Avenue, reports that possible acquisition targets include Spot Runner (cheap TV ads for local businesses), VideoEgg (video ads and a Facebook play), or JumpTap (mobile ads). WPP is already a minority investor in both Spot Runner and VideoEgg. Quick, sell those ad startups before the recession hits.
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