By Tim Bradshaw in London
Heineken and Google have struck a multimillion-euro partnership to collaborate on digital advertising, including YouTube video and mobile ads, in the latest sign of the growing power of technology companies in the advertising world.
The deal, which will span more than 20 international markets, is the first long-term collaboration directly between Google and a large brand, demonstrating the challenge for traditional agencies to provide new services in order to remain relevant.
In exchange for committing to a minimum amount of advertising investment across Google?s sites, Heineken will be given access to special consultancy, data and discounts from the search company.
?We feel a partnership with such outfits is a competitive advantage,? Alexis Nasard, Heineken?s chief commercial officer, told the Financial Times last week at the Cannes Lions advertising festival, where the brand?s television, digital and packaging campaigns won seven awards.
?This is a first attempt in a journey of collaborating with key sources of knowledge in a field that is changing quickly.?
Heineken?s marketing budget is worth 2.1bn euros ($3bn) annually, about 4 per cent of which is spent on digital marketing. Consumer goods groups that cannot sell their products online have been slower to adopt digital advertising than automotive or internet retailers.
Heineken?s move shows how seriously such brands are now taking the web as a platform for mass reach, given YouTube?s 3bn daily video views.
?We will work with Heineken on providing incremental reach on target audiences and compare these across different media types,? said Henrique de Castro, Google?s vice-president of global media and platforms.
?We expect innovative brands like Heineken to take the opportunity to lever partnerships with us to build their capability and innovate.?
Although Mr de Castro denied that Google was taking the place of traditional agencies, Mr Nasard said: ?[Google] knows their media better than anyone else [and] have access to an immense source of information … I don?t think any traditional advertising agency will know about Google?s business as well as Google knows about its business. The expertise they bring is unique.?
The drinks company will continue to work with AKQA, the digital agency responsible for its award-winning ?Star Player? Facebook game, and its media agency, WPP?s Mindshare.
But by going direct to Google for its expertise in video and mobile, analysts said Heineken?s deal highlighted the fine line technology companies must tread as both partner and competitor to intermediaries such as ad agencies.
?This immediately raises the spectre of disintermediation, which until now has been seen as … a concept to be concerned about rather than a reality. This looks very real,? said Thomas Singlehurst, media analyst at Citigroup. ?In as far as agencies can provide [a data aggregation] service, there is still arguably a place for them.?
This week, WPP, the world?s largest marketing group by revenues, launched Xaxis, an independent digital media and data analytics unit, in direct competition with Google?s DoubleClick.
? The Financial Times Limited 2011