KUHN CAPITAL Wednesday, December 13, 2017
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The Internet’s Next Industry Victim?

10/20/06

First it was the newspapers that felt the heat from emerging electronic alternatives. With subscriptions in steady decline before the onslaught of multiple media (a trend worsened, in many cases, by hyper-politicized news coverage alienating readers), the beleaguered newspaper industry is now defending its prized cash cow: classified ad revenue.

Declines in classified ads, already a pronounced trend, have lately been accelerating: The Wall Street Journal reports that September linage decreased 13.1% versus the month before, and The New York Times notes a “challenging” environment in which its classified revenue has dropped 7% this year versus last.

Now comes a business model that may eventually do to local advertising agencies what eBay and Craigslist is doing to classified ads.

Ten months after it was launched, Spot Runner has raised $40 million from an investor group that includes CBS, and advertising agency giants WPP and Interpublic Group. Accessed entirely through the Internet, Spot Runner creates low-cost, well-produced TV commercials for local businesses from an online library of customizable stock. Then, after approval, the company places the ads on cable and network outlets, charging a fraction of the traditional ad agency fee.

We’re sure the Spot Runner ad product will be rightly criticized as “cookie cutter”. But with a big-enough library and wide-enough distribution of ad templates across hundreds of local markets, many viewers will never notice a canned look. More important, many advertisers will have little difficulty choosing cheap but standardized ads over the generally execrable quality of locally produced spots.

Disintermediation in action.


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