• by Joe Mandese  @mp_joemandese, May 12, 2006

In what appears to be the first deal of its kind in recent memory, a major ad agency group will become an owner and operator of a media company that sells advertising to clients of the agency and other advertisers. The venture, a new retail-based digital media network dubbed OnSpot, is jointly owned by Paris-based agency holding company Publicis Group and Indianapolis-based real estate firm Simon Property Group. What makes the deal so unusual is that one unit of Publicis, Paris-based Medias & Regies, will sell the ad time on the network, while its traditional agencies and media shops will buy time on it.

Publicis executives would not disclose what initial advertisers would be participating in the launch of the network, which kicks off in three major markets - New York, Chicago and Los Angeles - on May 23, but the confirmed that clients of Publicis agencies would be among them. The New York Times reported that Coca-Cola has agreed to be a charter sponsor of the network. Coca-Cola's media is bought by MediaVest, a unit of Publicis.

The network, which is comprised of high-definitional digital video monitors in major U.S. shopping malls, ultimately plans to have 2,000 screens in 50 highly trafficked Simon Malls in the top 10 U.S. markets. The content will consist of lifestyle programming licensed from traditional TV producers and outlets, as well as advertising specifically crafted for retail locations.

This is not the first time Publicis has indicated plans to get directly into media ownership. When it launched Denuo, the new media consulting, research and development unit headed by Rishad Tobaccowala earlier this year, it said the new company would include a venture component that would invest in new media companies. To date, Denuo has announced relationships with broadband video developers Brightcove and ShadowTV's Groundhog TV unit, but it has not disclosed whether it holds equity stakes in those businesses.

Ultimately, Publicis executive says media ownership stakes are a means to an end: developing new media opportunities to better serve its advertising client base. But the fact that Publicis will also profit directly from the media it owns and sells to its advertising clients raises new issues for the ad industry.

In the case of OnSpot, Publicis is seeking to develop what many believe to be a key area of advertising growth: the so-called "shopper media" marketplace. In the case of Denuo: new media businesses and concepts that may not even exist yet.

OnSpot does promise to be an innovative new addition to the burgeoning place-based digital network space. The system, which underwent an extensive field test in the Roosevelt Field Mall on Long Island, NY, was the basis of an in depth Arbitron study showing that ads in such locations can greatly influence brand awareness and product purchasing.

"It is definitely a benefit to our advertisers," says Deborah Zdobinski, a corporate communications executive with Publicis USA. "It gets them closer to the point of sale."