VentureBeat: Video ad startup SpotXchange funded by Madison Ave guru, not conglomerate

VentureBeat: By Julie Ruvolo 02.4.08

It’s becoming more common for ad-focused technology companies to seek out investment from Madison Avenue, in order to gain investors’ connections to advertising clients. But usually the investor is one of the major ad holding companies. Example: WPP’s aggressive investments in VideoEgg, SpotRunner, Media Rights Capital and WildTangent, and acquisition of 24/7 Real Media.

Instead, video ad marketplace startup SpotXchange has taken funding from Alex Bogusky, a thought leader in the ad industry, and chief creative officer at top-rated ad agency Crispin Porter + Bogusky. He was joined in the funding round by six former executives from Janus Capital Group.

“[M]any agencies will see Bogusky’s involvement as one more reason why SpotExchange should be part of their [advertising] plan,” explains Michael Shehan, chief executive of SpotXchange.

Westminster, Colo.-based SpotXchange allows advertisers and publishers to buy and sell online video advertising in a real-time auction site.

The move reinforces what start-ups and major media companies alike already know. Technology or brand is only so good; relationships close deals. Ask your average media planner to tell you the difference between SpotXchange, ScanScout, YuMe, Broadband Enterprises, and Vuze, and expect a blank stare in return.

As for Bogusky, why SpotXchange over the others? Bogusky explains, “[Many] others seem to have technology that’s not really in line with the needs of agencies and media buyers. SpotX isn’t trying to reinvent advertising video so much as creating a buying tool/model that can replace and replicate the buys that have existed offline.” It’s his first investment in the space.

Startups that have taken funding from ad conglomerates have found that funding does not necessarily equate to ad dollars, Shehan tells me. “Just ask some of the media companies out there that have taken money from [advertising] holding companies,” he says.

SpotXchange is not the only startup turning to Madison Avenue personalities to curry favor with advertisers. Last week I mentioned defections from Omnicom to Vibrant Media, and from Interpublic Group’s McCann to mobile startup JumpTap. But SpotXchange’s move to seek name-brand investment over C-level talent is a new approach.

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