Facebook just inked a massive deal — What this means for the industry and consumers alike.
This week it was announced that Publicis Groupe had struck a $500 million ad deal with Facebook. The deal is supposed to involve the “co-creation of product around data, video and images, including core Facebook and Instagram” initially revolves around North America. MediaPost reports that, “As part of data access, both companies will collaborate to identify opportunities to run experiments using closed-loop measurement systems.”
Cited to be the biggest deal ever between an agency holding company and a tech platform, the pooled dollars enable Publicis companies like Starcom MediaVest Group (SMG), Zenith Optimedia, Digitas, Razorfish and Rosetta to gain access to this grand experiment. “Publicis will have access to Facebook’s API) and SMG will integrate its content advertising platform — [email protected] — into the recently announced Facebook Ad Network. SMG’s other tools, including media planning and convergence modeling products will be integrated with Facebook assets,” writes MediaPost. Access to Instagram and its coveted younger audience has also be cited as a key driver of this deal.
While I’m all in favor of the shifting of dollars away from traditional media and into digital, I do have to question the overall value to Publicis advertisers. Here’s what I like and what I don’t like about this deal.
- I’m always in favor of testing and measuring, and when both the publisher and campaign managers are involved, it’s easier to devise smart tests scenarios from which more learnings can be gained
- Publicis clients include heavy-hitting brands like Procter & Gamble, Verizon, Walmart and Coca-Cola all of which can benefit from experimentation, data exchange and access to Facebook’s audiences
- Deals of this size can’t be ignored by other power players, and whether they’re with Facebook or other platforms, we should expect to see more mega-deals announced in the future
The Less Good
- While Facebook and Instagram may be attractive to brands seeking to reach these users, users do not flock to the platform to be assaulted by brand messages and offers. In conducting my own consumer research, I asked women (who represent the majority of Facebook users) from across the U.S., “For what reason would you most likely not quit Facebook?” the answer, “To receive special offers from brands” was among the least popular.
- Younger Instagram users, 37 percent of which are age 18 – 29, are exactly the same type of user that doesn’t really trust advertising and instead prefers peer-generated content.
- If privacy-phobes already take issue with Facebook’s lack thereof, a deal to exchange data between Facebook and the Number 3 largest ad agency holding company shouldn’t make them feel any safer. And while Facebook announced in 2013 that it was going to participate in the AdChoices program by now, it doesn’t appear to actually have implemented it, and even if it did, this Publicis deal could now give them backdoor way to access your ad behavior.
- By sheer extrapolation, Facebook can take any learnings gleaned from its closed-loop experimentation with Publicis and apply them to convince other advertisers to do likewise deals. This could amount to a whole lot of digital deals in one basket, a scenario I never really like and which certainly continues to give Facebook financial security. And by the time these deals are inked and the campaigns running, will what’s working today really be working in a year or more from now?
- Facebook fake user account and ad fraud continues to be a problem. If you want to understand this problem better, watch this video:
Any ad campaigns run through this deal of this magnitude should take into account a margin of fraud in the neighborhood of 11 – 15 percent, which is the rate at which current estimates place online ad fraud. [Update May 28, 2014: New data reveals nearly one-third of all traffic has been generated by ad fraud]
One thing continues to be inevitable: If Google has been the 500-pound gorilla in digital advertising, with this latest deal Facebook clearly wants to give Google a run for its money. And in so doing, they continue to be the ones to watch.