Technology

Did Twitter Miss a Good Deal in $230 Million Omnicom Pact?

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Source: courtesy of Twitter
When Twitter Inc. (NYSE: TWTR) acquired mobile ad exchange MoPub last September the microblogging company got a real-time exchange that allows advertisers to automate their mobile ad buying. Today ad agency Omnicom Group Inc. (NYSE: OMC) confirmed that it had signed a deal with Twitter to integrate Omnicom’s automated ad buying unit with Twitter’s MoPub.

The deal is worth $230 million over two years and locks in advertising rates and inventory access for Omnicom’s agencies and gives Omnicom a “first look” and new ad units and other opportunities the Twitter develops. Twitter seems to be happy with its first deal with a major advertising holding company, but it may have given away too much.

Actually, it almost seems desperate. Twitter’s total revenues in the first quarter came to $250.5 million. Omnicom’s commitment, spread equally across eight quarters, represents about 12% of Twitter’s quarterly revenues.

Now ad inventory, like the editorial well, is virtually unlimited on the web, so Twitter is not in any serious danger of having given Omnicom too much cheap advertising space that Twitter can’t sell at a higher price to someone else later on. But compare it to the $500 million dollar partnership deal struck between Facebook Inc. (NASDAQ: FB) and Starcom MediaVest Group under which the two parties have agreed to work together over several years to create custom ad units for agencies in the Publicis stable. The Facebook deal appears to be a little less open-ended, and there does not appear to be any longer term commitment of inventory and pricing.

Twitter stock is trading up about 0.3% at $30.59 late Tuesday afternoo in a 52-week range of $29.51 to $74.73.

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