Omnicom and Publicis have come together to create the world’s largest advertising conglomerate, overtaking WPP. They have cited reasons as varied as better access to data analytics to larger global reach. Let’s look at the merger from various lenses and see how (and if) it will impact marketers:
Size & Global Reach:
Combined revenue will be $22 billion in 2012 – undoubtedly impressive, but as the 2nd and 3rd largest firms they were not particularly small to start with. Ominicom was $14 billion and Publicis was $7+ billion. While, yes, Publicis may have been feeling a bit small and left out, the gains of size are not that much in the agency business – with the exception of media buying.
Another reason that size doesn’t matter much in this industry is that agencies typically operate under their own brand names and are independent in their operations. This has been done to avoid conflict of interest – so two agencies within the same organization can handle competing brands.
There has been talk of redundancies, but outside of the corporate functions like HR and Finance, this is unlikely. It will be hard to merge agencies without getting into client conflict. It’s also hard to convince clients to switch agencies without a pitch which may allow WPP to sneak in.
Access to Data & Insights
It’s nice that they are thinking of this – it shows that they are thinking of modern marketing. But was a merger required for this? Surely a $14bn firm could have done business with IBM and SAP and got a good solution? Also, while undoubtedly they have access to much more data through the merger, I don’t think either party actually has exhausted the potential of its already available information. Moreover one reason why agencies traditionally rely on third parties like Nielsen is that you can’t one the one hand claim ‘Chinese Walls” between client accounts and then scoop up the data and run into a single analysis engine. A Pepsi might object to its data indirectly being given to Coke and vice versa (both are now in the Omnicom – Publicis fold)
A New Age Agency
In my piece on the Agency Dinosaur I argued that with social and digital on the rise, ability to just build awareness is not sufficient – we need agencies that understand the total customer experience and can help create an interactive story.
Sadly, the merger makes no claims of evolution. And size is often the enemy of change. Moreover they will be occupied with integration issues for at least a couple of years (already the debate has started on headquarters, listing, chairman etc).
So what does this mean to agency clients?
Not much I’m afraid. After the public posturing is over, the agencies will go back to doing the things they always did. There will be some attempts to cross-sell additional services, but both Omnicom and Publicis were full-service agencies to start with so potential is limited.
Only in media buying will we see changes – with it becoming a two horse race, traditional publishers, already facing declining sales will be pushed to the wall. Oh, wait, I have an interesting thought – can a $22 billion company also become a publisher?
I’m going to grab some popcorn and watch from the sidelines whether this marriage lays an egg or results in a stunning new mashup.
Image courtesy: FreeDigitalPhotos.net
