October 30, 2006 11:24 AM PST

TV ad start-up Spot Runner lands $40 million

Spot Runner, a start-up that puts local shoe stores on national television networks, has announced receiving $40 million in additional funding from CBS, Interpublic Group and other investors.

The company has created a system that identifies unsold TV spots on Bravo, ESPN and the hundreds of other networks that have sprung up in the cable revolution. It then sells them to local businesses. The ads can be broadcast nationwide, but most small businesses buy ads to run only in their region, which costs less.

A 30-second spot, particularly one that's not running at 8 p.m., is cheaper than one might think. In a demonstration in March, founder Nick Grouf logged on to the service and showed how individuals could buy spots on various cable networks for broadcasting in Berkeley, Calif., for around $18. Companies buy spots through a search, point-and-click menu.

"I'd like to buy a spot on ESPN and say, 'I hate football,'" said one French observer at the demonstration.

The low cost comes from the fact that most of these networks have lots of spare inventory. Every one of those promos on the History Channel for "Viking Week" represents 30 seconds that the network failed to sell.

Los Angeles-based Spot Runner also helps advertisers put together 30-second spots from a collection of canned art.

Other companies, however, are moving in to compete with Spot Runner, according to sources. Meanwhile, Revver.com, Brightcove and others have set up networks for selling video ads on the Web and through IPTV networks.

In all, Spot Runner has raised $60 million. The company was founded two and a half years ago but only came out of stealth mode this past January.

So far, the company has primarily landed local companies as clients, but it has also garnered business from national franchises. Century 21, ERA and Coldwell Banker, for instance, direct local real estate agents to the service, according to a Spot Runner representative.

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