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Denver Post
November 23, 2003

TV spots go to small businesses on the cheap; some call it a risky venture

By Kelly Pate Dwyer
Denver Post Business Writer

A young Denver entrepreneur is creating buzz in advertising circles by turning a profit from junked TV commercials.

Kevin Schaff recycles ads that cost anywhere from $50,000 to more than $1 million to produce, pitching them on the cheap to small businesses that can't afford the costly brainstorming, writing, filming, actors and editing that original productions require.

Schaff's company, Thought Equity, gives small companies access to top creative talent without the hefty price tag, but experts say the new ground Schaff is plowing is fraught with risk.

Thought Equity wipes the ads of all product and company references and resells them, typically for less than $10,000. Schaff is young - 29 - but he's no rookie. He started his first ad agency as a 19-year-old University of Wyoming student looking for something to put on his résumé.

Most agencies that send Schaff commercials insist their names never be used because their original clients paid dearly for the original work. And the fact that Thought Equity is copying on the cheap raises legal questions, Advertising Age magazine editor Hoag Levins said. But Schaff argues that he's serving a market that could otherwise only dream of TV - the most expensive and, in some cases, most prestigious place to sell your wares. And he said he buys the rights to what he resells.

"We're finding a market of people with $5,000 to $8,000 (budgets) that nobody wants to take on," Schaff said. Companies need to advertise on a local and regional basis, said Bart Cleveland, director of creativity for Sawyer Riley Compton, an Atlanta-based advertising firm. Thought Equity "gives businesses a central place to go," Cleveland said. As for the lack of originality, he said, "In our business, there is nothing new truly. We look at what life is and think of new applications for it." What differentiates Schaff's catalog of ads from typical stock footage and image companies is that Thought Equity sells an entire commercial, not just clips or pictures, and Schaff works across all industries, Cleveland said.

Sawyer Riley Compton, whose clients include Philips Electronics, Dow Chemical and the Ritz-Carlton Hotel Co., has sent 12 ads to Thought Equity, including "Kung Fu," a humorous spot created for the Atlanta Ballet. The ballet wanted to lure a younger audience. But some board members frowned on the ad, which shows two young slackers faking kung fu fighting in their living room, so the ad went straight into the drawer. Two years later, a school for diesel auto repair and refinishing brought the spot back to life.

WyoTech, which has a campus in Laramie, bought exclusive rights to air the ad locally. The Atlanta and Laramie versions are exactly the same, except for the ending. Kung Fu opens with two guys slouched in front of the TV. A commercial comes on and they're up and doing their own Jackie Chan riff, in slow motion, complete with sound effects. It ends when one guy leaps over the other, lands on the coffee table, which crashes to the floor. "Too much free time?" says the voice over. "Go see the ballet." The new version: "Everyone has skills. Some earn money. Enroll at WyoTech."

"I actually think the ad is more appropriate for WyoTech than the Atlanta Ballet," Cleveland said. He declined to discuss what money changed hands but said Sawyer Riley shared its take on the resale of Kung Fu with the Atlanta Ballet. Thought Equity started recycling print ads two years ago. The firm has amassed a library of more than 6,000 ads, including more than 1,000 TV commercials, from 300 advertising firms and production companies nationwide, Schaff said.

Thought Equity has recycled 25 of those commercials across the country since launching the TV side of its business this fall. To drum up fresh users for his ads, Schaff is going straight to where the need is - broadcast and cable-TV companies struggling for local advertisers.

Salesmen such as Comcast's Dave McGrath see Thought Equity as a sales tool. "It's one of those 'What a great idea, why didn't I think of it?"' said McGrath, who manages sales for Comcast in northern Colorado. Producing original ads takes time - too much time for some companies that want on the air now, McGrath said. "To have the ability to go in and from an initial meeting with clients, talk concept and show something that may fit them is an awesome tool to have," he said. "The basic guts of the ad stays as is, and we go ahead and tag it and put in licensed music beds, and we're off to the races."

McGrath hooked a construction company up with Thought Equity, which helped him close the sale. Third-party distributors are also selling Thought Equity's ads through cold calls to small businesses, such as Denver-based GolfTEC Inc. Hospitals, banks and mortgage companies are also clients.

But with so many parties involved, critics worry that someone will get burned. Sometimes the rights belong to an agency; other times it's a production house or the original company for whom the ad was created. "Where does freedom of domain begin and the stuff that's proprietary end? It's a really tricky gray zone," AdAge's Levins said. "Anytime anyone has copyrighted material someone else uses without their full knowledge and sign-off, you have a problem." Thought Equity gets agreement from any and all parties to get exclusive worldwide distribution rights, Schaff said. Thought Equity also doesn't use ads featuring actors who belong to the Screen Actors Guild.

Regardless of legal hurdles, Levins casts doubt on Thought Equity's growth potential. "I think lot of clients, except for the smallest, might have a hard time seeing their ads cloned around the country," Levins said. "The key is how many clients are small enough and isolated enough and sophisticated enough to know they are isolated and still be willing to do this?"





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