Do $100M+ deals between tech companies and ad agencies mean that the end is coming faster for old media?
The end of traditional media, choked off by a slow decline in incoming advertising dollars, so far looks like it will be a death by a thousand cuts.
We know which direction ad dollars are flowing. But following Facebook’s $500 million upfront deal with Publicis this week, the old school ad guys must be wondering if the end is coming sooner now.
For a decade, digital media companies have slowly chipped away at old media ad spend. Everything but TV has been hit badly. The common consensus from forecasts today is that digital media will slowly take another percent or two of the market each year and, some decade soon, there will be little left. eMarketer sees digital media spending jumping 23 percent in 2013 to 25 percent in 2014, slowly ticking up to 27, 28, 29 and 31 percent from 2015 to 2018.
Drip, drip, drip. But for how much longer?
The Facebook-Publicis deal is the largest ad deal ever done between an agency and a tech company. It will bring major brands onto the platform to execute marquee campaigns, like Procter & Gamble, Verizon, Walmart, and Coca-Cola. Publicis will get some access to Facebook data and the capacity to work on custom ad formats. The deal focuses only on North America, but there is reportedly an agreement in place to consider expanding it out globally if all goes well.
This Facebook deal is the latest in a run of nine-figure spending deals between advertising agencies and digital media companies.
In March Omnicom and Instagram agreed to a 12-month long advertising partnership estimated to be worth as much as $100 million. Google signed a $100-plus commitment with DigitasLBi and Razorfish for YouTube and Google Plus. Last April, Twitter made its own headlines with a multi-year deal with SMG rumored to be worth hundreds of millions.
At the start of this month, TV networks held their usual rounds of upfronts, where advertisers commit money ahead of time to the new season’s ad schedule. The networks can pull this off because they have the track record and the heft to warrant that size of financial commitment.
With Facebook and other tech firms established and comfortable enough now to demand similar respect, it spells bigger deals and more ad money aggressively moving to digital formats.
For anybody trying to work against the market's prevailing winds, it is enough to slump your shoulders just a little lower.
[image adapted from David Wilson]