Why Google's Deal With Heineken Is Essentially an Upfront Buy

Search Giant's Global President of Media Said All Work Will Still Go Through Agencies

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Google recently struck a multimillion-dollar global advertising deal with Heineken in what appeared to be a move that side-stepped agencies and media buyers. But according to Henrique de Castro, Google's global president of media and platforms, that 's not the case.

"All of the implementation is happening through agencies," he confirmed. "No one is being cut out. Agencies still have to do the execution and media buyers still have to do the planning -- we are overcomplicating this."

So why is Google doing this? The deal appears akin to the TV advertising commitments sold ahead every year of the fall TV season, or what is known as an upfront buy. Google is securing from Heineken guaranteed ad buys, which in this case largely entails placement on YouTube. Mr. de Castro said the nature of the deal is largely "strategic," meaning it will be a way for Google to help Heineken complement its TV advertising strategy with ads on YouTube.

"Digital used to be a small part of the media mix and now digital is a really large part of the media mix," he said, referring to how much advertisers spend online vs. traditional venues such as TV. "It's much more about full integration -- YouTube enables extended reach from TV."

He further stressed that the deal with Heineken also involves a fair amount of mobile buys, underscoring the fact that in many developing markets a mobile phone is the only media some people own.

But no matter the media, according to Google, the deal will necessarily involve Heineken's regular agencies, including AKQA and Mindshare.

"They're absolutely a part of this," Mr. de Castro said.

While he wouldn't name specific advertisers, Mr. de Castro confirmed Google has done similar deals with other companies, but on a smaller scale, and that Google will be looking to enter into more strategic upfront buys with advertisers in the near future.

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