Google Assimilates Major Agency Group.

June 5, 2008 on 12:37 pm | In Uncategorized | No Comments

Google and Publicis announce their ’special relationship’ (pronounced POOB – licis). This is the first time Google has made a joint announcement with any of the major advertising conglomerates. This article discusses the reasonsThe relationship has a number of aspects. The first is information sharing among executives. Another is a ‘first-of-its-kind global account team’ for Publicis. This will be further enhanced by employee exchange and transfer programs to enable corporate learning and increased integration. Agencies and Google both plan to relocate hundreds of employee, many on a permanent basis.

This could help them reduce inefficiencies in the account service process, which currently has Agency-side planners in addition to Google Account reps for every major account. Clearly there is a lot of room to streamline the account management process to make more room to do the most important thing – Get the clients to spend more.

The reason for this relationship seems simple enough – Ad Agencies are designed to work with traditional media companies which simply offered a demographic at a certain cost. There was little to worry about other than the demographic and the rate. This meant that the people they bought advertising from didn’t exactly have any special data or algorithms to help them place more effective ads. The agencies were experts at planning media by taking shots in the dark. (At a negotiated rate) For a time, agencies were doing great.

In comes high-tech web advertising led by Google, with its myriad Search, Contextual, and Display advertising. Managing this medium is much more complex, yet, the nature of the medium allows a lot of feedback, testing, optimization, and constant updating. Measuring audience engagement along with audience segmentation, and correlating it with other data sources and behaviours is the fundamental strength of the internet.

It should also be clear that most agencies don’t do a very good job of any of that, since its not what they are assembled to do, and they don’t have R&D budgets or mindsets. At best, agencies being mere brokers, they have not developed any meaningful technology to aid their clients. At worst, being simply shops that charge by the head, they have no short-term incentive to become more efficient, and do more work with less “Heads”, or “Hours” – another common basis for agency billing.

So, this deal makes sense for sure. It is Google who has the talent that can best allocate budgets. Unfortunately, since Google bills on volume, just as the agencies do, the conflict of interest seems to still exist. Then again, account service was never one of Google’s strong points. To non-agency folks, a Google Rep is someone like Amber B., or Stacy C. – no individual email addresses or phone numbers.

When all is said and done, Google may infiltrate its partner’s offices to the tune of hundreds of employees. This would give them a core insight into how agencies make their executive, as well as day-to-day decisions. It will also give them knowledge about how agencies justify their expenses to their clients.

Google is so capable, they’ll probably invent some new Agency-in-a-box technology that will enable agencies to further downsize for both traditional media planning as well as interactive staffs.

All the better when they decide to swallow an agency group or two. Can you say, Trojan Horse?

Tomorrow’s agencies won’t be dominated by scale, but by performance. Google’s technology, as well as it’s market position is something that is flattening the advertising landscape – taking away the core advantage of scale: negotiated bulk purchases. Since the best purchases won’t be bulk buys, but will be a series of more targeted placements, the old model on its way out.

This opens the door for publishers large and small, read – DOMAINERS – to step into the fray. So, Google realized how important building relationships, and getting knowledge of agency practices was. Will the domain owners or domain monetization companies follow their lead? One challenge is the fragmented nature of its stakeholders, and possible conflicting interests.

The domain industry has trade groups to address governmental and regulatory issues. The lesson from Google’s Publicis partnership is that domain owners also needs a group to integrate their interests, information, and client opportunities with advertising agencies. This is the only way to avoid the reliance on Google and Yahoo’s oligopoly on on the paid click market. Domain owners need to go up on the chain – and it is far more effective to court agencies than clients individually.

More on Publicis Groupe:

Acquired Digitas, the Boston online marketing firm in January, 2007, for $1.3 billion.
Owns agencies such as Saatchi & Saatchi, Leo Burnett, and ZenithOptimedia

Who does Publicis Groupe Represent?

Publicis

Cadbury-Schweppes, Coca Cola, HP, L’Oreal,Nestle,Pernod Ricard
P&G, Renault, Sanofi-Aventis, Siemens, Telefonica, UBS, Whirlpool, Zurich Financial

Leo Burnette

Coca Cola,Diageo,Walt Disney Co,Fiat,GM,Heinz,Kellogg
McDonalds,Philip Morris,Samsung, Wm. Wrigley Jr.

Saatchi and Saatchi

Ameriprise, Avaya,Bel, Bristol-Myers,Suibb Mead Johnson
Carlsberg,Deutsche Telekom/ T Mobile,Diageo Guiness,Emierates Airline
General Mills,JC Penney,Novartis,Sony Ericson
Toyota / Lexus, Visa Europe, Walmart

StarCom MediaVest Group

Kraft,MasterFoods,Miller Brewing Co,Philip Morris,Sara Lee

Zenith Optimedia

20th Century Fox,British Airways,JP Morgan Chase,Lloyds TSB
LVMH,Puma, Richemont Group,Sanofi-Aventis

Digitas

American Express(26% of their business)
Heineken, Home Depot, InterContinental Hotels Group, Time Warner, Wyeth, Wells Fargo

Source: Matt Robson writing for DomainNews.com – February 10th, 2008