Ad dollars are flying into the online video industry at an unprecedented rate, and at least one global media company is looking to take advantage of this boom–even if it means drawing money away from traditional media. Omnicom Group, which works with major brands like McDonalds, Apple, Pepsi, and Starbucks, is advising its clients to shift between 10% and 25% of their advertising budgets to online video.
Omnicom is touting online video as a flexible and easily measurable platform, especially when compared to its TV counterpart. Since there is so much inventory available online, advertisers can be much more exact about the content on which they spend their budgets. Daryl Simm, Omnicom’s CEO of Media Operations, spoke to the Wall Street Journal about this trend:
“Online video ad spending is growing at a considerably faster pace than overall media budgets have been growing. The way we look at it is we have got the TV partnerships that offer full episodes online, we have the Hulu type places that also offer full episodes of network TV shows and then we have partnerships with the premium video providers of the world such as AOL, Yahoo and YouTube. So TV money is traveling to all of those other alternatives.”
As Simm explained, the increased spend on online video ads will have to come out of TV budgets, but he doesn’t necessarily believe the big TV networks are in danger. “A significant portion of the dollars are actually going back to TV owners for their online properties,” he said.
Omnicom’s advice comes on the heels of food conglomerate Mondelez’s decision to sign a $200 upfront deal with Google. Simm didn’t say exactly how much each of Omnicom’s clients will spend online, and he instead noted that the percent increase will vary from brand to brand. Something tells me Pepsi in particular will be happy to heed Omnicom’s advice.