Digitas CEO welcomes Yahoo-Google ad deal

CANNES, France (Reuters) - The Chief Executive of Digitas, the online advertising arm of France’s Publicis, welcomed a new advertising deal between web search giants Google Inc. and Yahoo Inc., saying he hoped it could be extended to areas beyond search ads.

David Kenny told Reuters in an interview on Friday, on the sidelines of the Cannes Lions 2008 advertising festival, that he did not think the deal would reduce competition.

Last week Google, with more than 60 percent of the Web search market, and Yahoo, with more than 16.6 percent, announced a deal that would allow Yahoo to place Google ads on its site and collect the revenue.

This was after announcing separately that on-again, off-again merger talks between Yahoo and Microsoft Corp had failed.

Some marketing executives have expressed concern the deal between the two biggest sellers of search advertising may affect the pricing of the ads.

But Kenny said: “We are happy with that agreement. It has been mis-communicated. It’s not a lack of competition. It’s actually they both agreed to work out on an open platform.”

“We think that’s okay because it means it’s like all open markets, when you buy an equity, you can buy it anywhere and the more open and transparent it is, the more accurate the pricing is,” he added.

“We think that creating this so that it’s a more open platform for search (ads) is a good first step. I hope it extends to display. I hope it’s a process that can work in television,” he added.

Meanwhile, Henrique de Castro, managing director of European Sales and Media Solutions at Google, told “The Cannes Debate” seminar on Friday: “We think the world should be an open platform. There is no monopolistic approach to the customer ... We’re a partner with Yahoo but we’re also competing with Yahoo.”

In a separate deal, Publicis, the world’s fourth-largest advertising firm, and Google in January revealed they were combining their expertise to expand in the fast-growing digital advertising market.

The pair did not give much detail, only saying that under the non-exclusive deal Google would exchange its technological know-how for Publicis’s analytical and media planning expertise.

Publicis and Google disclosed they were cooperating in the digital sector one year after Publicis scooped up Internet ad agency Digitas for $1.3 billion.

The news also followed a buying spree last year which saw Internet and technology powerhouses such as Google, Yahoo and Microsoft snap up several leading Internet ad agencies.

Publicis, which is holding a “Digital Day” seminar on June 25 in Paris, is widely expected to give an update on the progress of its cooperation with Google.

“We believe that at least 80-85 percent of all media will be digitally-enabled within 5 years, maybe 100 percent within 10 years. If that happens, we need the platform to make that market work,” Kenny said.

Reporting by Dominique Vidalon; editing by Rory Channing