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Spot Runner fires, then hires*

August 13, 2008 |  4:53 pm

Spotrunner Here's a question: When are 50 layoffs in an advertising-related company NOT a sign that we're in a recession?

The answer: When that company is Los Angeles-based Spot Runner, which shed about 50 workers Monday but said today it planned to hire 60 more in an effort to shore up its online, national and local offerings. The changes aren't related to the current economic situation, said spokeswoman Rosabel Tao: Spot Runner has experienced a 50% increase in revenues from Q1 to Q2.

Spot Runner was launched in early 2006 by seasoned entrepreneurs Nick Grouf and David Waxman as a firm that made TV advertising available to local small business through the Web. Through Spot Runner,  local companies could design commercials using mostly pre-produced footage and buy ad space on television for as little as $499. It was much cheaper than the typical cost of creating a TV ad, and easy too: All they had to do was go to Spot Runner's website.

Investors liked the idea -- Spot Runner had raised $111 million by May of this year, counting big names such as CBS Corp. and Legg Mason Capital Management as financial backers. But as business grew, Spot Runner was looking beyond local. Executives talked about expanding overseas and partnered with upscale national brands such as Groupe Arnault/LVMH.

Now, Tao says, Spot Runner is realigning its business to grow three different categories: national marketing services, local marketing services and media platforms, which will develop technology to better serve clients such as ad agencies. (Most of Spot Runner's early clients didn't have ad agencies; that's why they needed Spot Runner.)

"What the national businesses need is so different from the local," she said. "We're ramping up the national. But we're not backing away from local."

Still, layoffs are never good news (especially for the people getting laid off). The changes underscore how difficult it is for companies to make money solely depending on advertising from small businesses, said Greg Sterling, an analyst with Sterling Market Intelligence. You'd need to get a lot of small-business accounts to match how much you'd earn with one big national account, and getting small businesses to use your advertising service is a lot like herding cats.

"A lot of these different online advertising vehicles and tools require people to develop some level of understanding and expertise, and that's asking for a certain level of behavioral change and time," Sterling said. Spot Runner "probably went with a path of lesser resistance in this national approach," he said.

Whether this new direction can prevent more layoffs remains to be seen. After all, most national advertisers already have ad agencies who create spots and buy space on TV, radio, online and in print. Spot Runner could potentially help them localize these national campaigns and work with franchises, but they might not need that help.

Which raises another question, this time without an answer. Asked Sterling: "What service or need does Spot Runner fulfill?"

-- Alana Semuels

Semuels, a Times staff writer, covers wireless, marketing and the L.A. tech scene

Photo: Workers at Spot Runner headquarters in Los Angeles. Credit: Glenn Koenig / Los Angeles Times

*An earlier version of this post misstated that Spot Runner had laid off 40 workers rather than about 50.