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| Has the Publicis-Omnicom merger created a marketing monster? | |
| (35 minutes later) | |
| Introducing the new, but not much improved, advertising industry. Following the announcement of a $35bn (£22.7bn) merger between rivals Publicis and Omnicom, adland now comes with 100% more consolidation and around 450% more bureaucracy. | Introducing the new, but not much improved, advertising industry. Following the announcement of a $35bn (£22.7bn) merger between rivals Publicis and Omnicom, adland now comes with 100% more consolidation and around 450% more bureaucracy. |
| The historic merger ousts WPP as the world's largest advertising firm and will create something of a marketing monster, called the Publicis Omnicom Group. The first thing you'll notice about this name is that it's incredibly catchy, clearly dreamed up by an advertising professional. The second is that Publicis is at the forefront of the new group – syntactically, but also symbolically. While positioned as a "merger of equals", ideas of égalité and fraternité are more at home in national mottos than corporate consolidations. It is widely thought that Paris-based Publicis will be allowed to take the limelight for a few years, with Omnicom running the show out of New York after Publicis chief executive Maurice Lévy, 71, retires. This might be an industry-changing deal, but it also smacks of legacy building. | The historic merger ousts WPP as the world's largest advertising firm and will create something of a marketing monster, called the Publicis Omnicom Group. The first thing you'll notice about this name is that it's incredibly catchy, clearly dreamed up by an advertising professional. The second is that Publicis is at the forefront of the new group – syntactically, but also symbolically. While positioned as a "merger of equals", ideas of égalité and fraternité are more at home in national mottos than corporate consolidations. It is widely thought that Paris-based Publicis will be allowed to take the limelight for a few years, with Omnicom running the show out of New York after Publicis chief executive Maurice Lévy, 71, retires. This might be an industry-changing deal, but it also smacks of legacy building. |
| Whether the merger eventually turns out to be a win for Publicis or Omnicom is yet to be seen, however it seems unlikely it will result in a win for the industry as a whole. The rationale for the deal is that in a world where the lines between media and marketing are increasingly blurred, "size," as Lévy put it, "will matter." The growing power of a handful of tech companies like Google, Twitter and Facebook means that scale is increasingly critical to advertising agencies when it comes to buying media and delivering value to clients. This deal is supposed to result in $500m (£325m) in efficiencies. | Whether the merger eventually turns out to be a win for Publicis or Omnicom is yet to be seen, however it seems unlikely it will result in a win for the industry as a whole. The rationale for the deal is that in a world where the lines between media and marketing are increasingly blurred, "size," as Lévy put it, "will matter." The growing power of a handful of tech companies like Google, Twitter and Facebook means that scale is increasingly critical to advertising agencies when it comes to buying media and delivering value to clients. This deal is supposed to result in $500m (£325m) in efficiencies. |
| Scale may be increasingly critical to the advertising industry, but it doesn't necessarily follow that if you "consolidate it, the business will come". Reacting to his new position as marketing mogul no 2, WPP's Sir Martin Sorrell noted: "Time will tell if the cultures will click and whether clients and talent benefit – and how $500m of synergies will be generated without job cuts." Which is a polite way of saying that the existing employees and clients of Publicis and Omnicom should be feeling very concerned. Indeed, while the press release spells out the "significant value" the deal should create for shareholders, it is light on detail of how it will really deliver to clients. | Scale may be increasingly critical to the advertising industry, but it doesn't necessarily follow that if you "consolidate it, the business will come". Reacting to his new position as marketing mogul no 2, WPP's Sir Martin Sorrell noted: "Time will tell if the cultures will click and whether clients and talent benefit – and how $500m of synergies will be generated without job cuts." Which is a polite way of saying that the existing employees and clients of Publicis and Omnicom should be feeling very concerned. Indeed, while the press release spells out the "significant value" the deal should create for shareholders, it is light on detail of how it will really deliver to clients. |
| Regulatory issues are also a concern. While advertising has always been big business, it is now effectively two big businesses. Should antitrust authorities allow the deal to go through, it will create a duopoly likely to stifle not just competition within the advertising industry, but also creativity. | Regulatory issues are also a concern. While advertising has always been big business, it is now effectively two big businesses. Should antitrust authorities allow the deal to go through, it will create a duopoly likely to stifle not just competition within the advertising industry, but also creativity. |
| Bigger companies might result in bigger efficiencies, but they don't necessarily result in bigger or better creative ideas. If you work in advertising you will have heard ad nauseam about the importance of "acting like a startup" when it comes to producing innovative work. Leanness and agility have become the mantras of the marketing world, but rather than truly acting like startups, big agencies are simply acquiring them. Indeed, more consolidation in the industry seems likely following the Publicis/Omnicom deal. Sorrell is a man unlikely to want to remain in second place for long and analysts are already speculating as to when the next round of acquisitions will take place. | Bigger companies might result in bigger efficiencies, but they don't necessarily result in bigger or better creative ideas. If you work in advertising you will have heard ad nauseam about the importance of "acting like a startup" when it comes to producing innovative work. Leanness and agility have become the mantras of the marketing world, but rather than truly acting like startups, big agencies are simply acquiring them. Indeed, more consolidation in the industry seems likely following the Publicis/Omnicom deal. Sorrell is a man unlikely to want to remain in second place for long and analysts are already speculating as to when the next round of acquisitions will take place. |
| Lévy called the Publicis Omnicom Group "a new company for a new world". But acquisition isn't an adaptation strategy. If traditional advertising agencies want to compete with the likes of Google, they will have to innovate, and innovation isn't usually a matter of old, white men making deals on Parisian rooftops. Which, as it turns out, was how this historic merger was born: a lighthearted jape between Lévy and Omnicom CEO John Wren after a chance meeting at the top of the Champs Élysées. "And so it is from a joke that everything started," Lévy stated. Let's just hope it doesn't end as a farce. | Lévy called the Publicis Omnicom Group "a new company for a new world". But acquisition isn't an adaptation strategy. If traditional advertising agencies want to compete with the likes of Google, they will have to innovate, and innovation isn't usually a matter of old, white men making deals on Parisian rooftops. Which, as it turns out, was how this historic merger was born: a lighthearted jape between Lévy and Omnicom CEO John Wren after a chance meeting at the top of the Champs Élysées. "And so it is from a joke that everything started," Lévy stated. Let's just hope it doesn't end as a farce. |