Announced at the onset of Advertising Week in New York City and before AOL’s second annual Programmatic Upfront, the company divulged that they and Publicis Groupe, the French multinational advertising and public relations company, plan to expansion of their multi-faceted six-year relationship into programmatic video and linear TV.
The move will provide VivaKi, and effectively all agencies inside Publicis Groupe, greater access to premium reserved – including private marketplaces – and non-reserved video environments through AOL Platforms. To further explain the expansion, Tim Armstrong, AOL’s Chairman and CEO, and Maurice Lévy, Chairman and CEO of Publicis Groupe, held a one-on-one live conversation during Advertising Week.
Earlier this week, it was reported that AOL’s top video executive Ran Harnevo, who joined the company in 2010, is leaving. He’ll be replaced by Viacom’s Dermot McCormack, who was most recently running digital properties for the cable programmer’s brands, including MTV. With the ongoing rumor of a merger with Yahoo, the once internet giant may be looking to “shape up for sale.”
According to eMarketer, digital video is growing 30 to 40 percent year-on-year, and is expected to reach $7.77 billion in 2015, up from $5.96 billion in 2014. As digital publishers transform their companies into programmatic advertising platforms, this strategy is proving to be successful by generating revenue through profitable video ads.
“Media companies who produce content at scale won’t do this with their premium ad products because: 1) it erodes their CPMs; 2) allows buyers to cherry pick inventory and 3) cuts our important relationships,” says Operative’s CEO Lorne Brown on the partnership. “In addition, programmatic companies charge a media company 7-15% to offload this inventory, when their own cost to service it is 2%. So net/net, smart for AOL and other aggregators of long tail inventory, but not something you will see broadcasters do at scale anytime soon.”
Publicis Groupe video spend is increasing accordingly as audiences continue their migration to digitally connected devices. VivaKi anticipates an equally significant increase in programmatic spend for 2015.
“Video is fundamentally changing the Internet into sight, sound, and motion and the Publicis Groupe / AOL partnership is the start of enabling global video advertising to scale to global consumers – offline or online,” said Armstrong. “AOL is transforming as a company and as a partner into a programmatic advertising platform, and today’s announcement is another big step in our strategy. Publicis is a global leader in digital advertising and we are excited to advance our global partnership into video and linear TV on the ONE by AOL platform.”
Maurice Lévy, Chairman and CEO of Publicis Groupe, added: “We have developed a very strong partnership with AOL under the leadership of Tim Armstrong and are extremely pleased with the outcomes for our clients. This new step will further enhance our ability to better serve our clients in the very important growth area of video. Our clients will benefit first hand from the innovations created by AOL.”
“Just two years ago, there were 54.7 million connected TV users, and that number will more than double in 2014,” Stephan Beringer, CEO of VivaKi and global president of Audience on Demand. “The numbers prove the dramatic change in consumers’ video consumption habits, and our escalation of video content has to be just as dramatic. That’s why our partnership with AOL is so valuable: it requires true collaboration to deliver value for consumers and advertisers by creating a video marketplace that wins the attention and engagement of the consumer.”