In what is being touted as one of the largest deals between and advertising network and a technology company, Facebook and Publicis have announced a partnership that is reportedly in the vicinity of USD 500 million.
The deal is applicable to all Publicis Groupe’s media and digital assets including Starcom MediaVest Group, Zenith Optimedia, Digitas and Razorfish. Though the deal will first impact the US market, it is expected to take shape globally in the near future.
The two companies have detailed out some areas where the deal will benefit each that includes the Facebook data integration into Publicis Groupe’s media-mix-modelling platform, rich measurement and the integration of a Publicis’ content-at-scale product into Facebook’s ad network.
Key takeaways from the Publicis-Facebook deal
#1 Ad networks and social media platforms
Advertising agencies’ inclination to signing large deals with social media companies is becoming a norm of sorts. Last month, Instagram signed a USD 100 million dollar deal with Omnicom. Prior to that, there are examples of large scale deals between Twitter and WPP, including one with Kantar, and also Twitter and Starcom MediaVest Group. Publicis Groupe digital brands DigitasLBi and Razorfish also signed over USD 100 million for inventory across Google’s social platforms.
The pattern is reflective of global holding companies recognising the role that social media platforms are playing not only as channels to reach out to consumers but also as data banks that give insights into consumer behaviour and allow contextual conversations. It would be interesting to note how these developments impact search or display advertising revenues in the near future.
#2 Social media dependence on advertising revenues
The other fact evident is that advertising has become mainstay revenue model for social media platforms replicating business models of traditional media. Even as this was expected since tried and tested media models and existing selling experiences would impact digital media, one of the arguments favouring digital was the creation of alternate revenue streams. It would however appear that new media has succumbed to old world order in revenue models.
#3 The Asia Pacific dilemma
Most of these deals originate from the United States but Asia Pacific, given that it houses the largest markets for social media platforms poses a unique challenge. Asia Pacific markets such as China, India, the Southeast Asia belt are crucial to advertisers. But even though social platform amass large scale numbers in these markets, the dots connecting users to ad revenues are still missing. Social media platforms’ large numbers are yet to translate to similar revenue figures in these markets and the challenge continues despite the big ticket deals.
#4 Social and Mobile
Mobile media has played a critical role in the growth of social media platforms. It is seen as one of the important channels that would connect the next five billion. This opens up various opportunities for agencies but unless media owners innovate on mobile screens to create relevant ad formats, the opportunity is still more hope than reality.
#5 Moving beyond failed merger talks
This deal is also important for Publicis Groupe as it comes in the wake of its failed merger conversations with Omnicom. Some of these developments reiterate that the groups have moved on from the merger conversations and are making relevant strides in the business.