• by Joe Mandese  @mp_joemandese, July 16, 2014

In an effort to convince more advertisers to begin using technology to automate the way they plan and buy out-of-home media, four-year-old ad tech start-up ADstruc is going to compete directly with Madison Avenue. Just months after one of the biggest agency holding companies -- Interpublic -- invested in it, ADstruc is launching its own advertising agency.

The new shop, code-named “Project X,” will pitch and service advertisers directly, competing with the kind of standalone out-of-home media-buying shops that typically are part of major agency holding companies, and which historically have controlled the lion’s share of the national out-of-home media business.

“We’ve watched so many agencies botch how they buy out-of-home media that we figured we could do it better ourselves,” says ADstruc Founder and CEO John Laramie, adding that Project X was born more out of necessity than a desire to compete with other agencies.

While ADstruc’s automation platform been scaling nicely, and is approaching $200 million in out-of-home media billings, it is still only being used by a handful of big ad shops, mainly Interpublic agencies and some leading edge digital shops like WPP’s Neo@ogilvy.

Laramie says ADstruc has nothing to lose and everything to gain by entering the agency business, because most of its growth has come directly from advertisers -- often local ones -- utilizing its self-serve or managed services platform, anyway.

By formalizing its managed services under a free-standing agency brand, he says, Project X will be able to compete directly for major national brands. He says the fledgling shop already is pitching big brands in the fast-food, entertainment and fashion categories, and he also expects some to work with other agencies that want to farm out their out-of-home media-buying to a specialty shop.

The big advantage Project X will have, he says, is that it sits on top of ADstruc’s technology, which is rapidly evolving from a simple automation play into a far more strategic data-based audience targeting system with the ability to identify and reach consumers in-market and at specific locations related to their brand research or purchasing journey.

For example, he says ADstruc recently developed a method for pin-pointing consumer tweets about brands in specific locations to geographically target out-of-home ads to them. He says ADstruc has already begun talking to mobile companies about ways of integration mobile data and ad targeting to build on that.

With more precise data targeting and planning systems and more efficient workflow management, Laramie says Project X can compete more effectively with even the biggest of Madison Avenue’s out-of-home specialists.

Asked if he is worried about biting the hand that feeds ADstruc, Laramie says he’s not, noting that big advertisers like Procter & Gamble, American Express and Target are beginning to utilize similar programmatic ad technologies to take their buying in-house anyway.

“If [traditional agencies] aren’t doing a good job, they need to get out of the way,” he says, adding that it’s imperative not just for advertisers, but for the out-of-home industry.