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A video ads startup slashes staff

Once hailed as the future of online advertising, Spot Runner has moved away from the small business market.

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(Fortune Small Business) -- Spot Runner once seemed an unbeatable value proposition for entrepreneurs seeking to maximize their marketing budgets. Launched in 2006, the Los Angeles company helps small businesses create video ads for as little as $499 and target them by zip code on local TV.

For a while Spot Runner thrived as more Main Street businesses abandoned the Yellow Pages in favor of broadcast and new-media advertising. (Print revenue for the old yellow books has been dropping steadily, from $15.2 billion in 2005 to $12.4 billion in 2008, according to market research firm Borrell Associates.) Spot Runner raised a total of $111 million in investment capital from companies such as CBS, WPP and Grupo Televisa. In early 2008, Spot Runner expanded into search-engine marketing, hoping to serve small businesses hungry for targeted ads on the Web.

Then came the credit crunch. "Everybody's getting hit hard, particularly local businesses," says Spot Runner president John Gentry.

Spot Runner laid off 165 employees late last year, reducing its staff to around 200. Instead of working directly with individual entrepreneurs, the company has recently concentrated on deals with national small business networks such as Century 21, the real estate chain, and Stuller Inc., a jewelry manufacturer and distributor that serves nearly 40,000 retailers.

One reason for tapping the networks: Without a Yellow Pages-size sales force, it's hard to reach individual small business owners.  To top of page

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