XLNTads and Spotzer, two different ways to make ads cheap

Why spend money to create expensive TV commercials, when you can get users to do the work for you?

Because its downright dangerous, and not necessarily as cheap as it sounds.

XLNTads, a self-funded startup in Conshohocken, PA, wants to help large corporations manage user-generated ad campaigns and help them avoid the brand-damaging setbacks and unexpected costs that these campaigns can entail. Spotzer, an Amsterdam-based ad-agency, is looking in the opposite direction, but we’ll get to them later.

The record of user-generated commercials has been mixed. Doritos and Yahoo scored big during the Super Bowl, offering consumers the chance to make a 30-second spot. One of the winning ads, which became a hit on YouTube, featured a goofy-looking guy who gets distracted by an attractive woman and then crashes his car, smashing his face into the steering wheel — and his bag of chips.

But last year, when GM tried to harness consumer enthusiasm to promote its Chevy Tahoe, it neglected to moderate videos before they were posted on the site, and soon found its campaign subverted by critics of their trucks (some of the satirical ads can be seen here).

And Heinz, which recently ran a campaign soliciting user-generated ads, spent around as much time, money, and energy managing that campaign as it would on any other. It also ended up with this bizarre submission, in which a college student brushes his teeth and shaves with Heinz ketchup.

XLNTads, like its competitors Vitrue and UGENmedia, seeks to take the hassle and risk out of creating, promoting, and managing user-generated ad campaigns. Currently in testing with a contest to produce ads for Microsoft’s XBox Live, XLNTads promises to handle the burdens themselves, reduce costs and protect against brand-damaging events.

For $75,000, a company gets a three month “subscription,” during which XLNTads will solicit submissions, filter out the noise, and come back with 10 selections it thinks are worthy. If the company then chooses to air one of these on TV or the net, it pays the ad’s creator $20,000.

XLNTads hopes to build a network of semi-professional talent that it can call on at any time, in an effort to break away from the contest model. It says that this network will set it apart from its competitors, but , in our view, it will also create a low-rent, virtual ad agency that creates the appearance of user-generated ads, but almost defeats their point.

Meanwhile, Spotzer, of the Netherlands, has a different model. An ad factory, it cranks out large numbers of commercials that aim to be clever and memorable but generic enough for small and medium-sized businesses across the world to use. Because of the fact that actors and production crews often have lots of downtime between jobs, Spotzer can pay on volume. It sets up a location, hires a handful of freelancing professionals, and re-uses all of them to film eight ads in the time it normally takes to make one. In one instance, in Kiev, Ukraine, Spotzer made 100 ads in ten days and spent €500,000. It makes commercials for many different industries, and leaves placeholders called “doughnuts,” in the videos where companies can insert their logos and slogans.

Instead of selling the ads it makes, Spotzer licenses them at prices that small and medium sized businesses can afford. By paying $500-1200, a company gets the exclusive rights to air the ad in a given market for six months at a time, so in theory, the same ad could be simultaneously promoting two or more different companies throughout the world.

Its main competitor, Los Angeles’ Spot Runner, focuses on the U.S. market, and tries to tailor its ads to uniquely American sensibilities. Spotzer, on the other hand, attempts to make commercials that will resonate throughout the Western world. Right now. the site is in alpha and offers very few ads, but we found that Spotzer’s available productions packed zing, where Spot Runner’s commercials felt relatively cheap and ham-fisted.

Both XLNTads and Spotzer, which very recently launched a site for advertising gigs, aim to use the web to find and nurture pools of talent that will help them produce ads on the cheap.

Like XLNTads, Spotzer also wants to create a network, but populate it with an international body of freelancing professionals instead of the quasi-amateurs that XLNTads seeks to find. To this end, it has very recently launched Spotzer Studio, where it lists open projects for these freelances to peruse.

There are listings for producers to handle the creation of 20 commercials, voiceover work for talent to voice the same ads in multiple languages, requests for archival footage, animators, and musicians to re-score old ads.

Spotzer has raised three rounds of capital of undisclosed sizes. The most recent came from Cyrte Investments, a large telecom, media, and technology fund owned by a Dutch media tycoon named John de Mol. In an earlier round Spotzer attracted DutchView, the Netherland’s largest post-production company.