Google teams up with Omnicom for advertising

Google is to team up with Omnicom Media in a substantial advertising deal worth hundreds of millions.

The deal, which was revealed by the Wall Street Journal, will see Omnicom pay millions for a guaranteed slot on Google’s advertising network, which Omnicom will then sell to its clients. There will be a trading desk which will allow Omnicom to auction its Google ad space to subscribers over the next two years.

Omnicom was already buying ad space on Google for its clients, but this new system will work more smoothly and provide additional features for Omnicom, such as analytics of how well ads are performing.

“We’ve turned the engineering fire hose at Google toward display advertising. This is really another milestone in our investment,” said Neal Mohan, vice president for display ads at Google.

Daryl Simm, CEO of Omnicom Media, said: “All commitments that we make are backed up by client strategy, client recommendations and client agreements. We believe that the benefits that come forward from the deal are going to be very attractive. That is the way we have to operate and the basis of any media vendor deal we operate.”

Google depends greatly on its revenue gained from advertising, which represents 96 percent of its profits. Its recent figures for the second quarter of 2010 showed profits of $2.06 billion from Google Networks and AdSense alone, but its entire advertising revenues in the three month period ending on June 30 show profits of $6.56 billion. It has earned over $13 billion from advertising this year alone, which will most likely double by the end of the year.

Other companies, such as Publicis Groupe, have joined forces with Google in the past to offer advertising through a different channel than the traditional Google Networks and AdSense. This latest deal with Omnicom should see Google continue to increase its profits as it expands the methods it offers for advertising.