Umair Haque / Bubblegeneration
umair haque  


Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Monday, January 23, 2006

Plasticity and Post-Branding Mini Case Study - Spotrunner

There's been a great deal of buzz about Spotrunner recently. But there's also a great deal of confusion. Many feel, intuitively, that Spotrunner's going to be revolutionary - but no one can really explain why. Let me try and deconstruct Spotrunner and the economics of ads for a second, and also draw out some implications for branding.

Spotrunner's intent isn't just to make buying TV ads hyperefficient - it's to make the entire TV advertising value chain hyperefficient, like Google makes the larger media value chain hyperefficient.

How? By making TV ads more plastic than they were before. Before, ads were a perfect example of an indivisible input - you had to pay a great deal to have a 30 second spot produced, and then more to have it distributed.

Spotrunner's disrupting this equation. But let's be really clear about exactly how. It's making TV ads themselves microchunked - it's making formerly indivisible inputs divisible.

On Spotrunner, you choose a generic ad, and rebundle it with minor personalized info - your company's name, contact address, etc. The indivisibility of ads has suddenly been vaporized. It's not just that anyone can buy them - when you buy an ad on Spotrunner, you're really buying several rebundled, microchunked goods - so it's that the ad itself has been redefined.

This is a perfect example of one the way in which microchunking unlocks distributed scale economies - through the reuse and recominbation of microchunks. Spotrunner can be hyperefficient not just because it allows access to buying distribution online, but because it microchunks ads, letting them be rebundled - and so reused - making Spotrunner a far more efficient economic solution to buying ads than anything else in it's strategic group.

There's a lot of 2.0 noise out there at the moment - lots of plays that are strategically misfiring (Hi Ning). I think Web and Media 2.0 guys should take a single really deep lesson from Spotrunner: It's not enough just to build a market, network, or community.

Rather, you have to think strategically about them - how do they create value? By value, I don't means cells in a spreadsheet. I mean the reshaping of a value chain or industry, the redefinition of a customer base, or the redefinition of products and services (preferably, all three). This, more often than not, requires edge competencies - understanding what makes markets, networks, and communities productive and disruptive.

Spotrunner creates value by leveraging plasticity to reshape the TV value chain, making it hyperefficient. Spotrunner has targeted with great accuracy a specific edge competence that is deeply disruptive to it's target industry - plasticity kills traditional advertising dead.

Now, this has deep implications for branding. It is the perfect example of the hypercommoditization of social meanings. That the same generic ads are today available to everyone at a fraction of the price custom produced ads were yesterday means, necessarily, that the price of social meanings themselves just dropped dramatically.

If you're in advertising, you should stop and think about this for a second. Most ad heads respond to Spotrunner with disgust. As a former creative, I feel your pain - generic ads are indeed creatively bankrupt (even if that in itself is strangely cool).

But Spotrunner is just a mote in a storm that's about to strip advertising to it's core - the commoditization of social meaning is accelerating everywhere around us; through communities of connected consumers, through the explosion of micromedia, through the fall of global trade barriers fueling an explosion of global brands. Smart brand strategists are going to begin to shift away from the simplistic strategy of engineering (commoditized) meanings into brands.

To me, the most interesting part of Spotrunner is that they've totally missed the biggest opportunity that currently exists to disrupt advertising, and that's easily within their grasp. It's not distribution, or the microchunking of generic ads...I'll leave it to you to guess (hint: think edge competencies).

-- umair // 9:30 PM // 10 comments


Having worked briefly in the TV and ad world, I can tell you that Spotrunner (or something like it), if executed well, will be massive.

Creating ads for TV, still the best medium to show of your products in all their full-motion glory, is totally out of reach for most advertisers, even if they have the necessary funds to pay for the space or produce the ads.

In theory, something like Spotrunner can create something hyper-efficient, which is the TV advertising industry's worst nightmare. The value that is trapped deep within the big ad agencies can be unlocked by this. For example, I could take 5 key people (one creative director, three tech/camera/graphics people, and one biz-dev person) from a major agency and start churning our high quality add-ons for these semi-generic ads. These video clips and graphics etc. could be purchased independently and then loaded into the spotrunner system.

To create such clips in the current system would cost millions and be very slow. With a small team, however, each individual in my hypothetical 5 man team would command a much higher salary, and have the kind of freedom that's impossible in the ad biz. In theory, hundreds of these micro firms could proliferate to piggyback on the Spotrunner network effect.

While of course such a solution isn't for every advertiser, there are so many who it would work for, that the implications are huge.
// Anonymous Anonymous // 10:33 PM

Hi Anon,

Thanks for that excellent comment - that is a great description of why plasticity is disruptive.
// Blogger umair // 10:38 PM

...time to ramp up my alter-ego-start-up, Put It On The i guess...

Less flippantly, looks great, the post above describes exactly how I imagined it getting done, the only way you could. (Witness the opposite happening with online advertising: used to be one guy banging out an ad an hour, now it costs 100x more for 100x lower click thru. Ha!)

If we had the bandwidth with TIOTI we'd re-insert 1 commercial per 30 mins that we had sold the space on, no kidding. Might do later.
// Anonymous paulpod // 12:01 AM

OK, I think I understand (and agree) that Spotrunner is creating value by microchunking and rebundling television ads.

Here's my question: Aren't television ads a Media 1.0 anachronism? Now that my content is microchunked by its producers and rebundled by itunes, bloglines and tivo, I don't watch tv ads. I don't understand who is going to sit through ads that are not relevant or creative.
// Anonymous Rick Burnes // 2:05 AM

I don't think this is really the ultimate microchunking example on the TV value chain. The next step will be the creation of an IP-based ad distribution network that smaller local stations will subscribe to. ( I suspect this model will approximate Google's plans for dMarc.) Think of it as AdBrite for TV - it reduces friction in a few areas, including ad sales pains for smaller TV stations, and ad production and media buying pains for small advertisers.
// Anonymous Cem Sertoglu // 5:32 AM

This even though not executed perfectly will still make a huge impact. I wish I'd thought of this. TONS I mean TONS of little businesses across the country would happily plunk down $1k or so for a quick ad.

What markets do they have agreements with? And what happens if they don't know how to pronounce your company's name?
// Anonymous Brian Breslin // 5:52 AM

They clearly could get even more efficient and help generate even more cash: They could allow for developers/producers in the general public to create and submit new generic ads. The producers could be incented by vanity and maybe even a nominal royalty (maybe $1) everytime someone customizes their 'generic' ad. Furthermore, they could create an online ad network, similar to AdSense for video on Web sites. If I were a major old media player (Rupert?) I would so, buy or duplicate this.
// Blogger Gramsci // 2:14 PM

Admitly based on a brief review of the site, I have reservations regarding the utility of this.

The ads are premanufactured like greeting or birthday cards. They could have thousands of these ads but essentially people will focus on a select few that either fit the demographics of consumers interested in a specific service, or are the most appealing/flexible ads. It seems creatively bankrupt where the same ads will be run by different companies creating brand confusion and what not. Honestly, when I see the same old tired ad (take for example the typical cold medicine ad with the 'doctors recommend' bullshit) it reduces the influence of the ad. I find it a bother and waste of air time. I also don't think this is revolutionary. If you've ever watched local public television, there is a large number of generic, generally pointless, wholly uninspired ads similar to these.

I guess it's a good start for allowing the little guy to play the big guy's game. There's better ways to do this however.

I'm suprised somebody hasn't made a longtail reference in regards to this. Maybe it's too '2005' for the current discussion.
// Blogger dhd // 9:54 PM

UMAR - Spot Runner is a Local Advertising play. Its not for the 25 million dollar ad budget accounts. Its for the local restaurant, or the local furniture store. How much branding do the need? The entry barrier into the TV world is too big for these guys.
// Anonymous Anonymous // 6:57 AM

Umair says, "Spotrunner's intent isn't just to make buying TV ads hyperefficient - it's to make the entire TV advertising value chain hyperefficient, like Google makes the larger media value chain hyperefficient."

I'll stop short of calling Umair a schill, but there's something very solicitous about all the articles I've seen on this topic so far.

But let's examine the word "hyperefficient." Meaning that some process, some group of workers (be it the 5-person team that one person mentioned, or a large organization) would be trimmed out of the equation and therefore, the budget.

First off, having bought TV advertising for my small business, the cost of the ad is less of a problem than the price of air time -- which seems to cost more with agencies like this one, who control your ad and don't give you a tape so you can air it where you want.

Local businesses have been advertising on television since its inception. The production cost for creating local ads are competitive with the prices offered by this company, especially when you consider the add-ons, which, in this company's model, cost $$$ extra. Heck, it costs extra for them to bother to talk with you on the phone. At least a local TV station will take some time with you, for free.

Besides, some small businesses like the idea of having video of their store on television, or at least having a unique ad crafted just for them. This company doesn't offer that, either. (Not really, anyway: their "custom" ads sound like mystery meat.)

Regarding the air time, I found from my own experience that I could get a better deal from a regular agency (there are several that gladly handle small advertisers, such as or the TV stations themselves.

I don't really see any hyperefficiency within this ad generating machine. It looks a bit impersonal, and I'd rather deal with real people.

I'd also rather not support some Silicon Valley venture-funded company who probably just wants to fatten themselves up in the press so they can be bought out by Google like every one else.
// Anonymous Bonnie // 11:00 PM
Post a Comment

Recent Tweets


    due diligence
    a vc
    tj's weblog
    venture chronicles
    the big picture
    bill burnham
    babak nivi
    n-c thoughts
    london gsb

    chicago fed
    dallas fed
    ny fed
    world bank
    nouriel roubini


    uhaque (dot) mba2003 (at) london (dot) edu


    atom feed

    technorati profile

    blog archives