Broadcasters exchange ads for startup equity | WARC | The Feed

Broadcasters exchange ads for startup equity

Rival ad-funded broadcasters in the UK, ITV and Channel 4, have set up venture arms tasked with promoting TV ads to startups growing out of digital advertising, investing in these early-stage companies with in-kind TV exposure.

Why it matters

Naturally, broadcasters would say that ad time on their networks is worth more than what cash can buy, but in the case of startups trying to grow awareness they note a very real plateau where digital advertising can take the brand no further. 

Details

• The idea originated in Sweden back in 2002 when a company called Aggregate AB, Bloomberg reports, used a ‘fund’ to buy equity with ad time. German broadcasters took on the idea before the end of the decade.
• Channel 4 began its fund in 2015, investing in firms including DTC mattress firm Eve Sleep, crowdfunder Crowdcube Capital, and even Pinterest.
  
• While some venture capitalists doubt that the benefit of media can match that of cold, hard cash, the combined cost of millions’ worth of media plus creative and strategic consultation tends to be way out of young companies’ reach; TV also brings a certain mainstream validation.
• Some bets have paid off for broadcasters, with exits like Pinterest delivering a certain payback. But the bigger prize is an early connection to potentially major companies in future as well as access to startups’ troves of data that can shed light on how digital and TV marketing can better work together.

Key quotes

“There is stardust in making a TV ad. It’s really energizing. You can’t put a value on that” – Ben Farren, founder of Spoke, a men’s clothing website now advertising on ITV.

“We use a lot of digital because it’s very measurable, but it only gets you so far. You can see where you hit that plateau on Facebook and Google” – Giles Rhys Jones, CMO, what3words, a digital mapping startup now advertising on ITV.
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Sourced from Bloomberg