The announcement of a proposed merger between Publicis and Omnicom — with a combined market cap of $35 billion — surprised the industry this week, bringing to light various issues surrounding the union of these two titans. Besides the possible internal issues, such as client conflicts, duplication of staff, etc., the merger has most of us wondering if bigger is better in the era of “big data” and how the new company would affect the entire industry.
We asked: Will the merger between Publicis and Omnicom allow the advertising industry to compete for digital advertising and distribution dollars against new(er) media giants like Google and Facebook? What opportunities in the industry will appear as a result of the merger?
Erik Dochtermann, CEO | KD+E
The merger won’t likely allow the new entity to negotiate any better than the old; the myriad buying divisions of the existing companies don’t present or negotiate with one voice now, and that is unlikely to change. One of the motivating reasons behind the merger is acknowledging big data and the increasingly important role interactive plays in the advertising process. This will foster increased investment in new digital and social concepts now that media money will flow. It will also increase the number of smaller specialty shops to service specific interactive initiatives. Deep expertise will be valuable and critical in making the most of the new technologies.
Jonathan Salem Baskin, Founder | Baskin Associates, Inc.
Perhaps. I bet that was part of the logic, but if so, it might represent its tragic flaw. Ad agencies are strategists and content creators that have managed client communications across distribution platforms dating back to quill and parchment. Will the merger make the new agency any smarter or more effective in doing that? I know it must sound like heresy, but Facebook might not be a big deal a few years from now (anybody remember AOL?). It seems to me that the holding company model is far more of a financial maneuver (though its media buying clout will benefit). But distribution? I fear it might confuse the cart for the horse.
The opportunities resulting from the merger are those that are already apparent. Smaller agencies will peel off clients. Brands will take more strategy and distribution management in-house. Consumers will continue to reject (or simply ignore) much of the nonsense that huge agencies need to create for huge clients.
Ultimately, it’s not really a big deal. The news for advertising remains that the industry hasn't come to terms with its ultimate purpose. Advertisers need to figure out how to translate their messages into something more compelling than generic ‘content’ or pointless ‘engagement.’ Even the most mobile or immersive technologies don't make useless stuff any more useful, at least in the context of trying to sell something.
Enriching some execs and their advisors has nothing to with figuring it out.
Peter Levitan, Founder | Peter Levitan & Co.
I woke up yesterday to Omnicom's CEO John Wren telling CNBC that the merger will result in a more ‘nimble’ agency. Really? As an advertising man who worked at Saatchi & Saatchi when it was the world's largest agency, I can tell you that bigger is the enemy of nimble.
While the issues facing huge-to-small advertising agencies are complex, the most painful issue is the reduction in profitability that started in the 1980s. The only advantage I can see from this merger is a reduction in the new agency's cost structure, which of course means fewer employees. Will this make them stronger in the face of evolving competition? Only if they use some of that cash to be one of the companies that is involved in the evolution itself.
Jeff Kempler, Chief Operating Officer | Sub Rosa
The notion of competing for dollars inherently includes several assumptions that seem to miss important points. Namely, the assumptions seem to be that there is a fixed sum of dollars over which an array of industrial competitors are locked in a zero-sum struggle, and that targeting is the be-all end-all of conveying brand messages and motivating the consumer. Algorithms and the like may empower data and coordinates for where to launch a message, but they do not generate stories, provoke emotion or engender affinity — let alone loyalty or evangelism. The opportunity in any cycle — where quantitative thinking driven by scale becomes in vogue — is for creativity, authenticity and a well-told story to break through that which is predicted (and therefore predictable). People and enterprises that keep creativity, ingenuity and humanism at their core will have the greatest opportunities in consolidated markets. The examples are manifest: Pixar, The Weinstein Company, HBO, Glassnote Records, Square, etc.
Steve Schildwachter, Executive Vice President | Draftfcb
It's premature to judge this merger, but wise to watch it closely, keeping three questions in mind.
1. How will it affect the work? Does creative get more compelling? Does media get used more strategically? Do campaigns work better across disciplines?
2. How will it change client relationships? Will Publicis-Omnicom's agencies build client business better? There's been a lot of talk about client conflicts, but what about the opportunity for organic growth?
3. What's the strategic plan for big data? The initial announcement focused on the new company's ability to compete with Google, Facebook and Epsilon, which are data companies — but how? What capabilities will Publicis Omnicom develop, and how will these help make the work better and build client business?
Gina Grillo, President & CEO | The Advertising Club of New York
Our industry has never seen a merger of traditional and digital like this before, so the implications for the future of advertising are significant. This new powerhouse will strive to serve an industry increasingly dominated by data and automated trading of ad space. With so much talent and expertise pooled together, we are hopeful that exciting and dynamic new partnerships will emerge. The combination of Publicis' and Omnicom's resources fuels the opportunity for increased collaboration across disciplines under one network. This likely will translate to more innovation and the advancement of diversity of thought on behalf of clients and the industry as a whole. Being creatively driven is a priority for our industry, as well as finding new ways to innovate, experiment and inspire the ways businesses engage with consumers. How this will play out remains to be seen, but it’s my hope that it will continue to push the advertising business forward.
Mike Kelly, Partner & CEO | Brand Value Advisors
In my mind, the immediate opportunity is not what this deal is all about. Instead, this merger is akin to countries forming alliances before the start of a long war whose outcome is far from certain. This merger is a marshaling of access to capital, resources, markets, heft and talent. Much like in the book publishing industry, there is tremendous uncertainty in the market, with various consumer dynamics and competition in play. With names big like Google, Amazon and Facebook in the mix, the combination is a logical hedge against the future — even if the new holding company isn't certain what the future holds.