Video startup Vidmob, which has been seen as a rival to agencies, just signed its first contract with one

Vidmob

Vidmob (l-r): head of agency partnerships Greg Erdelyi, account strategist Ilyssa Bernstein, COOJason Donnell, research strategist Sarah Graham, project management lead Luke Lamble, CEO Alex Collmer.

• Buzzy video startup Vidmob specializes in slicing videos into bite-size pieces for social media, theoretically saving marketers money.
• Vidmob recently raised $25 million in a series B funding round led by Austin VC BuildGroup.
• The company previously worked with brands and platforms but just signed its first contract with an ad agency, Havas Health and You.
• Agency staffers first joked about "the machines taking over" but now see Vidmob as potentially valuable, said Havas chief development officer Jeff Hoffman.
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Every advertiser needs faster, cheaper, more effective digital video to attract easily distracted consumers.

In the past, buzzy startup Vidmob claimed to have solved that problem by outsourcing parts of the production process to freelance creatives. It's been called a "TaskRabbit for video" that now specializes in using data analytics to turn existing TV spots into short clips fit to live on platforms like Instagram and Snapchat.

This week, the company - which has worked with brands like Ikea and Neutrogena and serves as an official creative partner for every major social media platform - announced its first deal with an ad agency: Healthcare-focused Havas Health and You.

Read more: Samba TV has acquired a startup to help teach big brands direct-to-consumer tricks

Agency staffers first joked about automated services like Vidmob eliminating their jobs

"The first response was, 'Are the machines taking over?'" said the agency's chief development officer Jeff Hoffman.

Jokes aside, Vidmob does, at first glance, seem like the very sort of service that could render traditional ad agencies less relevant to marketers interested in cutting costs wherever they can. But its founders insist that they are allies, not competitors.

Greg Erdelyi, Vidmob's head of agency partnerships, previously held top executive roles at Y&R and J. Walter Thompson. He said his company can help creative teams slice two 60-second TV ads into 200 different social media clips in a week and a half rather than go through the process of creating new material. The platform's Agile Creative Studio automatically goes through each video on a frame-by-frame basis and tags 35 to 40 different creative elements, Erdelyi said. It even uses IMDB to identify celebrities.

How does this help agencies?

Vidmob founder and CEO Alex Collmer told Business Insider the platform will analyze all ads Havas Health and You has made and suggest edits. For example, it can show which moments are most emotionally effective or identify exactly when viewers stop paying attention to a given video.

Erdelyi, Hoffman, and Collmer said the goal is for Havas to collaborate with Vidmob's freelancers, learn the platform and eventually develop its own in-house capabilities. Because the work is backed by data, Erdelyi said, creatives who experiment with existing work will no longer be "blindly throwing darts with [their] clients' money."

Healthcare is a rare growth area for American ad agencies

Healthcare might not be the first place one would expect to see such an approach, since it generally isn't known for great creative. But it is a critical area for ad agencies as big spenders in categories like automotive and CPG slash their budgets, and it's uniquely valuable in America since pharmaceutical ads are banned in every other country except New Zealand.

Hoffman said he hopes using Vidmob will help his agency stand out in new business pitches. He added that the Havas legal team will also help Vidmob ensure that all ads comply with regulations.

Both parties declined to say how much Havas will pay for Vidmob's services.

In June, the company announced that it had completed a $25 million Series B fundraising round led by BuildGroup, an Austin-based venture capital group that invests in data-focused software companies. It has raised $45 million since launching in 2014, with investors including Acadia Woods Partners, Interlock Partners, and You and Mr. Jones, an ad tech holding company founded by former Havas global CEO David Jones.

This is not the first time Havas has invested in a freelance approach to creative. In 2012 it acquired a majority stake in Boulder-based Victors and Spoils, an agency that foresaw an end to long-term agency of record contracts and used a then-controversial crowdsourcing process to develop projects while minimizing costs to clients. Victors and Spoils went out of business just over a year ago.