Details of a unique revenue sharing joint-venture are emerging between the mighty ad holding company, Omnicom, and the up-and-coming mobile advertising firm Amobee.
Advertising juggernaut Omnicom owns a plethora of prominent agencies, including TBWA, DDB and BBDO, and its pact with Amobee marks a striking new departure, given its apparent dislike of digital ad agencies.
Origins of an aversion
A little history helps to explain this aversion. A major acquisition back in the late 1990s led to burnt fingers for the company’s CEO, John Wren. The stock he’d bought in two digital ad firms, Organic and Agency.com, plunged in value precipitously as the dot.com crash of the late ’90s and early 2000s struck. Wren ended up losing a board member after the trauma, and faced a potentially wounding lawsuit against the company which, happily, proved unsuccessful. The two newly acquired agencies had to be quarantined in “Seneca Investments”, an off-balance sheet vehicle.
Unsurprisingly, it’s taken the best part of a decade for Omnicom to overcome its timorousness and venture back into the digital ad space, this time by embracing the burgeoning market in mobile phones advertising. Under the new arrangement, Amobee will collaborate with Airwave, Omnicom’s existing mobile advertising agency. Amobee’s platform will enhance Airwave’s capabilities, says Omnicom Asia’s CEO Barry Cupples, who added, “With our own resources and talent, working with Amobee has given us a head start in a space we believe will dominate within platform media, content, and data provision. We will grow Airwave together as partners.”
The virtues of sharing
From its origins in Asia, Amobee now employs 200 people in Singapore and San Francisco and has rapidly established itself as one of the largest purchasers of mobile ad inventory in Europe. Clients include Barnes & Noble, Ebay and Google.
The company’s CEO Trevor Healy explains that the firm provides “soup to nuts” mobile marketing solutions, from cutting-edge apps to 3D media and tablets, right down to traditional display ad buys. Omnicom is clearly aware of emerging trends in the mobile marketplace and knows that rich revenues can be tapped.
Omnicom is clear that the new arrangement isn’t an ownership stake, it’s a revenue share which deftly leaves Amobee with all the owned-tech-asset risk, yet feeds Omnicom a generous cut of the gross profit.