Mondelez has signed a $200m upfront deal with YouTube in a major statement intent from the food manufacturer.
Google is making a huge push to monetise its video platform after building out its agency teams and wooing brands to YouTube's potential over the last few years.
Last month Google confirmed it was in negotiations with media buyers across Australia as its upfront, or Preferred model, where the top five percent of YouTube inventory is made available to agencies and brands on a reserved basis.
Agencies are currently in negotiations with Google over rates, and so have been guarded about the potential of the YouTube platform to disrupt the market and its implications for traditional recipients of brand dollars, such as TV networks.
Starcom is Mondelez's media agency in the US. While the US deal is not part of the Preferred program, locally the agency has been one of the most bullish about YouTube as a mechanism for distributing brand dollars and engaging audiences.
While the $200m deal in the US is a deal for content as well as inventory, Starcom MediaVest Sydney MD Annick Perrin told AdNews that both the Preferred model and YouTube's legacy First Watch product, whereby a brand could guarantee that theirs is the first ad a user saw when logging on to YouTube, were smarter ways of reaching customers.
"It was very similar to first and last break [in TV]. TV companies never monetised that cleverly. First Watch enabled better targeting and stopped that wastage."
More broadly, Mondelez has been at the vanguard of companies set to go digital first in terms of media spend. Earlier this year the company stuck a deal with video advertising platform TubeMogul whereby it will do all of its video buys via the platform. Starcom will handle buying and strategy, but with Mondelez making its own technology decisions and retaining its data.
It could be a model that other global brands spending heavily on digital pursue.
Mondelez made a statement earlier this year that half of its media budget would be put into digital advertising by 2016, based on the return seen from digital ads compared to traditional television ads. Mark Clouse, the company's North American president said, "Digital programming has proven to drive twice the ROI of traditional TV advertising."
That gives an indication of which channels may be the losers following the YouTube deal.
Meanwhile, as Google makes its push for brand dollars globally, the company is wooing brand marketers and their agency teams locally. The company has already flown out two big brands, along with their media and creative agencies, from Australia to its San Bruno Brandlab operation.
The aim is to show brands and creative teams how to build out content strategies and maximise results from using YouTube.
That creates a pull-through mechanism for brand dollars which appears to be working, at least as far as Mondelez is concerned.
In a statement, Modelez said that: In addition to the advertising commitment, Mondelez and Google will partner on content pilots through YouTube's Brand Partner Program.
Brokered in conjunction with Starcom MediaVest, the agreement with Google is global and covers developed markets in North America and Europe as well as emerging markets in Eastern Europe, Latin America, the Middle East and Asia Pacific.
"We believe video will be a key growth driver for our brands, and programmatic buying will play an important role in accelerating that growth," said Bonin Bough, vice president of global media and consumer engagement at Mondelez International. "Today, 58 percent of consumers turn to digital platforms for their daily media consumption. Although we've adjusted our media spending to reflect that behavior, there's still a gap. The deal with Google will enable us to close that 'digital divide.'
"This new agreement is our largest in digital media so far. It showcases a cutting-edge approach to video that will make media buying, creative production, data and analytics work together in real time and at a fraction of the cost."
Mondelez told AdNews it was "certainly enthusiastic about leveraging the Google deal locally".
Corporate affiars manager Julian Polachek added:
"It’s a huge step forwards towards meeting our global target of 10 per cent of our media spend on online video.
"Locally our online video spend is currently sitting around that 10 per cent of budget mark. It’s great that we’re operating in lockstep with the global transition towards being a bigger player in the digital space.
"The deal is also complementary to other aspects of our digital strategy, like the Mobile Futures program."
Carat is Mondelez's media agency partner in Australia.
Additional reporting by Rebecca Chambers.
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