UPDATE 1-Omnicom, Twitter sign $230 mln mobile ad deal

Tue May 27, 2014 3:19pm EDT

(Adds comments from Omnicom executive and analyst)

By Sruthi Ramakrishnan

May 27 (Reuters) - Omnicom Group Inc's media services division signed a deal worth $230 million with Twitter Inc that will integrate Omnicom's automated ad buying unit Accuen with Twitter's mobile ad exchange MoPub.

The two-year deal will lock in ad rates and inventory access for Omnicom agencies and will also give Omnicom a "first look" at new ad units and opportunities being developed by the microblogging site.

The deal is expected to drive better pricing and targeting, said Jonathan Schaaf, president of U.S. Digital Investment for Omnicom Media Group.

"Twitter's been a major advertising partner for our clients in the past...(Omnicom) wanted to form a closer business relationship with Twitter that extends beyond just media buying."

Twitter confirmed the deal but declined to comment further.

Wall Street Journal reported the deal first. (link.reuters.com/xyj69v)

"The news reflects positive business momentum for Twitter and the fact that Twitter can sustain its revenue growth independently of growth in numbers of users given Twitter's uniqueness as a communications medium for marketers," Pivotal Research Group analyst Brian Wieser wrote in a note.

Twitter bought MoPub in September for $350 million in stock.

Omnicom's Schaaf said he expected mobile advertising to become a larger portion of overall advertising.

"The average consumer spends a quarter of their daily screen time with their mobile device and it's only about 10 percent of the total marketing dollars, so I'd expect that to level off."

(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Sriraj Kalluvila)