Can ad agencies trust Google?

Publicis Groupes announcement that it has been working with Google sparked a war of words between Publicis chief Maurice Levy and his WPP counterpart Sir Martin Sorrell and has got the industry asking: Google, friend or foe?

f1_120x120Publicis Groupe’s announcement that it has been working with Google sparked a war of words between Publicis chief Maurice Levy and his WPP counterpart Sir Martin Sorrell and has got the industry asking: Google, friend or foe?

Publicis revealed limited details of the collaboration last week, saying that the two companies were planning a “talent exchange” to share their respective creative and technical know-how. But behind the warm words, sceptics are wary of Google’s real intentions.

Google has always maintained it has no desire to become an advertising agency, but Sorrell has seen it as enough of a threat to refer to it as a “frenemy” in the past. Last week, he suggested that Publicis’ partnership with Google lacked substance and indicated a “bit of an Achilles’ heel when it comes to technology” on the part of the French advertising group. Levy hit back, calling Sorrell’s comments “really cheap”.

In an exclusive interview with Marketing Week, Levy dismisses fears that Google will turn out to be a long-term enemy and says that its technical expertise was a key reason for forming the partnership as digital becomes an increasingly important consideration for advertising groups.

“Google knows what it can and can’t do,” he says. “To become an agency, it would have to acquire a holding company, then there would be a conflict. It is better for Google to stay in areas it masters and for us to grow in areas with core skills and develop new models.”

Levy adds that the Publicis-Google partnership underlines the “new, more open and collaborative world we live in. This is the way all industries are progressing”.

Google sent shivers down the spine of the industry when it agreed to buy internet advertising company DoubleClick for $3.1bn (£1.5bn) last April. In the same month, the search giant signed a long-term deal with Clear Channel Radio to sell radio spot ads.

However, Google insists it is a technology company rather than a media owner and is keen to play down the threat it poses to agencies, particularly media agencies.

Mark Howe, Google UK’s head of sales, says: “This [deal with Publicis] dispels the myth that we are trying to disintermediate agencies. Agencies are our friends and allies.” He adds that those claiming that Google is a threat to the industry know “little” about the company. “There will also be a bit of back-biting from a few agencies because they did not get there first,” he says, adding that Google wants to help the advertising industry understand how it works.

Sorrell expressed doubts about the substance of the deal at the World Economic Forum in Davos, Switzerland, last week when he apparently told Reuters: “Next time I meet with [Google chief executive] Eric Schmidt I think I’ll send out a press release. This morning I met Maurice Levy – does this mean we’re putting together a joint venture?”
Sorrell is not alone in viewing the latest announcement as a PR stunt. One senior industry source says: “There needs to be much more detailed information.” Another senior source adds: “I’m not sure I would want to tell Google about how my agency operates. Google sees agencies as a necessary short-term evil, that will be consigned to the dustbin of history.”

The second source claims Google is more interested in direct relationships with clients and rarely places any value on agencies. “But an agency has a much broader perspective,” he adds. “Google knows that there is much more to this than just search.”

Arjo Ghosh, chief executive of i-Crossing UK, concedes that Google is looking to build more direct relationships with brands in the long term. But he believes that traditional advertising agencies will still have the upper hand for some time to come. “Agencies are strategic,” he says. “This is a discussion that Google cannot get into at this stage. Google may know mobile and display advertising, but it does not understand the wider marketing picture.”
Mark Cridge, chief executive of digital agency Glue London, says that the influence Google wields means every agency wants to work with the company. He adds that Google is “essential” to any agency with a digital focus.
“However, this is a fine line to tread,” he says. “In some ways, Google has the potential to be a big competitor. But it is also quite clearly a trusted partner.”

Publicis said last week that it had been collaborating with Google for more than a year. Levy and Schmidt said that the two companies would be pooling resources and working closely to develop new technology to improve internet advertising and boost online ad revenue.

The non-exclusive deal is designed to help Google understand how to cater for clients, while providing Publicis with information on technology, programming and targeted communications. But some wonder what benefits Publicis can actually draw from the Google co-operation, other than a PR boost.

Levy says that the knowledge Google provides will help the agency to better serve its clients, boost its technology knowledge and be seen as an industry “thought leader”. “This is a good collaboration for better use of data. We can send the right information to the right people,” he adds.

The agreement may be driven by alleged problems with Donovan Data Systems (DDS), the company that provides Publicis-owned media agency Starcom with its media buying software, according to sources. Starcom’s contract with DDS came up for renewal in December and sources say that Publicis’ announcement with Google may be linked to that. However, Publicis strongly denies such a link.

Ghosh sees the Publicis-Google deal as the sign of the industry maturing. “This is a fresh challenge for traditional advertising agencies,” he says. “Agencies must now respond and show how they add value.”

There is no doubting the power and influence of Google in the new digital world, so it is of little surprise that Publicis and other advertising groups are cosying up to the company. The industry will be watching closely to see what comes of this latest collaboration in an attempt to get some definitive answers about whether Google really is a friend or an enemy to the advertising industry.

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