In the midst of their highly-publicized merger collapse with Omnicom, French-based advertising holding company Publicis announced a massive $500 million partnership with Facebook yesterday.The multi-year deal is said to involve partnerships on new products focusing on video, data, images, and will include core products in the Facebook portfolio (including Instagram).
The deal, the largest of its kind to date, highlights the holding company’s continued focus on bringing its clients –including Coca-Cola and P&G– further into the digital age. (Not to mention, it does take a little of the spotlight off the company after failing to complete said merger, which has been described as a “major embarrassment” to the conglomerate more than once).
On paper, the Publicis-Facebook agreement makes perfect sense. Some of the holding company media agencies, such as Starcom and Razorfish, likely already spend significant ad dollars on Facebook, and that number was unlikely to increase anytime in the near future anyway. In addition, this gives the agencies an opportunity to potentially work with Facebook insiders directly (or, more directly than they were previously) to incorporate new digital marketing offerings within the social network. Hell, that’s potentially good for all of us, as any “customized” products invented through this deal would likely get a larger release should they be well-received.
Best yet, for Publicis clients and media planners alike, a holding company-wide deal with Facebook means, theoretically, no more having to negotiate individual rates per client. As I have spent time within Omnicom’s trading desk, I know how tedious and unnecessary these individualized deals are– not to mention, terribly inefficient in terms of pricing.
While the media deal with Facebook is great for Publicis, their employees, and certainly many of their clients– of course, there are disadvantages to these types of arrangements. For starters, an upfront of this size means that the holding company’s individual agencies will be put on the hot-seat to sell this inventory– less the group face a financial penalty. When Publicis purchased Razorfish from Microsoft years ago, it had agreed to spend “hundreds of millions” with the ad network; a commitment it had difficulty meeting.
Mainly, this is due to one of the systematic issues within agency holding companies– the lack of synergy between the agencies themselves. Within all of the various branches of the Publicis digital marketing tree, there are thousands of individual media teams making doing their own media planning for their specific sets of clients. On top of this silo effect inter-agency, in my experience, I’ve seen different media planning teams within the same agency or holding company working with completely separate teams on the publisher side; which leads to even less communication, and decreases the potential efficiencies an opportunity like this has to offer.
The fear here, for clients, is Publicis running into another issue of meeting its minimum commitments– which could then force the holding company into issuing “decrees” to media teams to ensure that each one of their clients is spending a certain amount with Facebook. This has failed miserably with respect to agency trading desks, as media teams, understandably, reject the notion of “being forced” to utilize one particular network over another.
Personally, I do hope to see some success from this media partnership– after all, the potential for new, innovative products within the Facebook properties is good for all of us; but, as a Publicis client (if I were), I’d be sure to check my media plans a little more carefully moving forward, especially where the social network is concerned.
What do you think about this Publicis-Facebook deal? Have any insider insight? Let me know below!