Facebook has announced a long-term partnership with the French advertising conglomerate Publicis Groupe, a deal thought to be worth around US$500m over several years. The tie up between the world’s largest social network and the third largest advertising holding company is sure to shake up the industry, but what do both parties seek to gain from this?
Laura Desmond, one of Publicis’ lead negotiators, said the deal will involve “co-creation of product around data, video and images, including core Facebook and Instagram”. So what does this actually mean? Well, for a start, it should mean less digital clutter. To understand why, look at the differences between Facebook and traditional advertising firms.
The huge growth in digital and social media advertising has presented ad agencies – and Publicis is one of the world’s largest – with a huge challenge. No longer is strength in TV, magazines and billboards enough. Agencies must engage with us online.
In Publicis’s case, the firm is scarred by the collapse this month of a merger with US rival Omnicom that would have created the world’s largest advertising company. The Facebook deal therefore represents a real statement that the company is ready to meet the digital challenge. Digital-focused companies already within the wider Publicis Groupe such as DigitasLBi, or Razorfish will be able to offer clients new media opportunities before their competitors. Publicis will be the first agency with such levels of access to Facebook and we can expect further innovations in video advertising, visual storytelling, audience insights and much more.
Facebook is set to gain new advertising opportunities via the development of advertising tools on its network. Instagram, for instance, may have 200 million monthly active users but advertising to this young, wealthy and engaged audience is in its infancy. Here’s where Publicis may be able to step in. By outsourcing some of its advertising work, Facebook will immediately gain from “best of breed” marketing organisations with major clients. This will help Facebook pilot new advertising products and provide higher quality and more engaging ads on Instagram. It won’t just be a way of firing out more commercials: the deal will help Facebook explore the true worth of its audience insights.
This is a crucial time for Facebook. As social media commentator Hugh Roberts has pointed out:
Facebook has some important new ad platforms in their infancy: auto-play video, Instagram and their new mobile ad network – and they need to be able to show that this new diverse, mobile-first portfolio works for brands.
Digital content is becoming increasingly contextualised, and sites offering lots of comments and interaction are likely to increasingly roll out infinite scrolling; what started with ads based on your google search history will soon lead to entire websites tailored to the individual user (or potential consumer, in this case). To take advantage of these developments, both Facebook and Publicis will gain the ability to test new advertising solutions ahead of their competitors. So for example Publicis group clients will be able to test out image-based storytelling on Instagram and video advertising on Facebook. Online video says a thousand words after all, and on Facebook, videos now play automatically.
All this has the potential to be somewhat annoying. But it doesn’t have to be. If this deal facilitates more precise targeting of audiences on a major scale, internet users will hopefully see less pollution of their timeline while advertisers will enjoy improved returns on their investment.