Cable Spot Exchanges Emerging - Broadcasting & Cable

Cable Spot Exchanges Emerging

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It’s not a new idea, but the notion of using the Internet to bring together buyers and sellers of local cable ad time seems to be getting legs. Backers of two new Internet-commerce platforms for local cable advertising say they’re gaining traction with advertisers and MSOs as they aim to reduce transaction costs and broaden the pool of advertisers that buy local cable time:

  • SpotRunner, a Los Angeles company backed by technology venture capital firms Battery Ventures and Index Ventures, says local advertiser usage is rising for its do-it-all resource that combines access to pre-produced, customizable commercials with Internet-based cable ad planning and buying tools.
  • SoftWave Media Exchange Inc., an 18-month-old company that provides an online platform uniting advertisers with more than 1,000 U.S. radio stations, is turning its attention to the spot cable market with an e-commerce system that lets advertisers plan, schedule and buy cable time over local systems. Co-founder/CEO Josh Wexler says SoftWave will announce its first deals with cable industry ad providers shortly.

What’s in it for cable companies? If the systems catch on, they could deliver local ad managers extra money for unsold spots at relatively high profit margins. That’s because the electronic exchanges deliver pre-sold campaigns that don’t involve sales commissions to local account executives.

Both providers say they’re out to support, not compete with, industry participants ranging from local cable companies to multi-market rep firms like National Cable Communications. The main idea: to reduce costs and complications associated with conceiving and running a cable TV ad campaign.

“If you look at the entire process and how long it takes to execute the buy, and how much it truly costs, there’s just a lot of efficiencies that can be more automated,” says SpotWave co-founder/CEO Josh Wexler.

John Gentry, a former Discovery Networks executive who is SpotRunner’s chief revenue officer, won’t specify numbers. But he says advertisers in categories ranging from real-estate brokers to specialty retailers have embraced SpotRunner’s one-stop ad-buying platform. SpotRunner hopes to appeal to small businesses that normally don’t advertise on television. “This is about offering television to Joe’s Pizza on the corner,” says Gentry, “and making that a very realistic, viable high quality option for them.”

As for business models, neither company wants to replicate the advertising “auction” approach prevalent within Web-based search resources like Google.com, which lets merchants bid their way into priority ad positions. SpotRunner, which bills itself as an advertising agency, makes money from small-business clients that pay to customize pre-produced commercials and book cable ad time. SoftWave collects a per-transaction fee from cable systems that accept advertiser orders flowing over the SoftWave platform.

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