Omnicom Group has inked a deal with Google. The holding company has made commitment to increase spending on display ads with the Internet giant in exchange for technology services.
The agreement, according to Omnicom Media Group Digital CEO Matt Spiegel, calls for collaboration, notably around the development of Google's audience-based ad auction system and the tools Omnicom's trading desk uses to access inventory.
"It formalizes the relationship we have in a strategic partnership," Spiegel said. "It's a recognition that we've spent a lot of time and energy investing in the future of the ad-exchange-driven display world."
In return, sources said Omnicom would "substantially" increase its global spending on Google properties, either buying directly on YouTube, Google Finance and its ad network or through Google's ad exchange. The spending figure is estimated at "hundreds of millions" of dollars, per sources.
In exchange for the spending increase, Omnicom will receive a raft of services, including technology consultation, integration assistance, training and co-marketing support. (See also: "Google - Too Many Moving Parts?")
The arrangement could raise the question of whether Omnicom is using client-marketing dollars in return for such services. Spiegel said that's not the case, since the agreement does not include "guarantees" but "commitments."
"We have definitely committed to working with them and spending more dollars via Google, but this is a natural bet as this space is growing rapidly," he said via e-mail. "There are no dollars committed to upfront and no minimum guarantees in place. Certainly as we work closely together, one of the ways we'll both judge the success of the partnership is the level of increased media volume through their tools and properties, but again, that doesn't mean we have to spend to a specific number."
The deal illustrates, in microcosm, the outsized role Google is playing in the online ad market, even in the display space it has only recently begun focusing on. For example, Omnicom could use Google-owned technology to bid on display ads offered through a Google-owned auction platform that relies on Google's ad network for a big portion of its inventory. Those ads would then be served using Google's ad-serving technology.
Close collaboration with media sellers is a foreign concept in the traditional media world, but it's necessary in a data-driven online ad arena increasingly reliant on algorithms, Spiegel said. Google has also struck a partnership with Publicis Groupe, for example.
"The media business is fundamentally changing," he said. "A key element is sophisticated technologies at the center of the transaction process. It's critical we have wide expertise to use these technologies."
Omnicom is in advanced talks with other top tech and media companies, including Microsoft and Yahoo, about similar partnerships, according to sources.
Online ad exchanges are gaining momentum as agencies look to buy inventory based on specific audience segments. Omnicom rivals Publicis, Interpublic, WPP, Havas and MDC have all set up trading desks that typically use demand-side platforms to bid on exchanges.
Google is banking on this emerging infrastructure to significantly grow the display ad market -- and its role therein. Google's DoubleClick Exchange has the largest pool of inventory available. Last month, Google bought Invite Media, a demand-side platform used by agencies to find and buy inventory on exchanges. The increased commitment is a sign that it is making progress in building a substantial display ad business to complement its dominant position in search.
The agreement is non-exclusive, meaning Omnicom can use other technology partners for the trading desk and Google can continue working with other agency holding groups. Invite Media is a main partner for Publicis, for example.
Omnicom uses Google-owned Invite in Europe, but it uses independent ad tech providers Turn and X+1 in the United States. It will continue to do so, Spiegel said.
"I don't want to see a world where Google is the only dominant player in this space," he said. "Our objective is to work with best-in-class partners, of which Google is one."