Well, this is interesting. Google’s Advertising Assistance Program extends to video ads. Earlier today I published an investigative post about Google’s relationship with Publicis and other large ad agencies and incentive programs whereby Google pays the ad agencies to use its advertising platform. That post focussed on the demand-side platforms (DSPs) and trading desks inside the ad agencies which sometimes are powered by Google technology under the covers. Well, it turns out that Google also offers ad agencies incentives to adopt its video and display ads.
A reader who used to work at Google sent us a tip with some text from a PDF marked “confidential and proprietary” that was circulated to Google sales people back in 2009 detailing the “North America Display & Video Incentive Program.” The handout basically lists some sales talking points, including some stats on the disparity between consumer online video viewing and the amount of advertising dollars going to video.
Google never pays rebates, commissions, or kickbacks directly. Rather it clothes the payments in the guise of technical assistance, on-site consultations, industry research, training, and other assistance to help advertising agencies adopt new kinds of advertising formats such as video. Apparently, coming up with their own pre-roll video ads for their clients is too taxing for the ad agencies and they need some help. Google can call these payments whatever it wants, but it has no way of knowing what the ad agencies actually do with the money. Does it really all go towards “research” and “technical support” or does it find its way to help pad their bottom line. If it is the latter, then these payments effectively amount to a kickback.
Before I keep beating up on Google, I should note that Google is not alone here. Such commissions and kickbacks are standard practice in the advertising industry. And in fact, when Google tried to stop paying commissions a few years ago, there was an uproar from the agencies (who control the advertising purse strings of most of all the large companies). That obviously didn’t go so well, since Google is once again playing ball.
Here is the part of the PDF about the financial incentives:
The plan includes graduated spend incentives, as well as adoption bonuses to encourage more agencies to try out new media. Participating agencies will receive quarterly reports detailing spend and associated incentives. Incentives will be automatically calculated by Google’s Finance team, and paid to qualifying agencies on a quarterly basis.
Google will invest in research initiatives that address both large questions and client specific needs:
• Industry-wide research will cover ideal formats and mixes for consumer engagement
• Partnership with specific clients and campaigns will focus on ad effectiveness relationship between various media
Rich Media & Onsite Campaign Support
Since support for constantly evolving rich media formats is both critical and taxing, Google will provide resources to the agency. The program includes, as needed:
• Technical support to assist in transitioning video and other assets to rich media, easing the execution of these new formats
• On-site operational support to assist creative teams in the implementation of large campaigns
Min US Spend Payout %
$20M – <$30M 8%
$10M – <$20M 6%
$5M – <$10M 4%
$3M – <$5M 2%
Min US Clients Payout %
45 – 59 3%
30 – 44 2%
15 – 29 1%
• Annual plan with quarterly cash payment
• Based on billed spend during that quarter
• Agencies may aggregate to a single entity if contracted under that single entity
Payouts matched to quarterly investment Client adoption increases incentives
• Annual plan with quarterly cash payment
• Client list pre-determined (at the brand level) -exceptions/additions to be approved by Google’s Finance team
I asked Google if this program is still in place and spokesperson responded that “we work with many advertising agencies and marketers to help them develop and invest in new advertising technologies and formats, including technological assistance, measurement, creative development, research funding and co-marketing.” He also pointed me to the FAQ on this Adwords Help page, which states:
From time to time Google offers participating advertisers certain incentives to accelerate the adoption and investment in Google’s advertising programs. Advertisers may receive financial incentives, including but not limited to credits, to help fund their campaigns (e.g., in the Google Display and Video Incentive Program, participating agencies receive financial incentives each calendar quarter based upon the amount of their display and video advertising spend for the previous quarter). In addition, advertisers may receive campaign assistance such as industry research and on-site consultation to support the growth of Google’s advertising programs. If you are eligible for an incentive program, you will be contacted with appropriate opportunities for participation.
But just take a look at those incentives. If an ad agency spends $30 million of its clients’ money on video or display advertising on Google, it would get $3 million back in financial incentives. On the lower end, $5 million in ad spending, would generate a $100,000 payment. I’m sure all that would go to “research.”
Photo credit: flickr/ Nathan Gibbs