Merging Ad Giants = One Big Mammoth. But Will It Fly?
Co-CEOs Maurice Levy (L) and John Wren (R)
The French Publicis Groupe and American born Omnicom Group have announced plans to join forces in what could be the largest advertising holding company in history.
This deal topped the charts with a combined capitalization of $35 Billion. Between the two companies they had combined revenues in 2012 of $22.7 Billion. They say they are uniting in a “merger of equals.” The new company will be know as Publicis Omnicom Groupe.
The new Publicis Omnicom Groupe is planning this merger will help it keep pace with the powerful earnings of Google ($45 Billion in 2012) and most recently the above earnings estimated performance of Facebook. Fortunes are to be made with the increasing revenues being spent in digital media. Estimates by eMarketer see the share of total world ad dollars spent moving from 22% on digital media currently to over 27% in 2017.
In a story from the Wall Street Journal, “the advantages of this merger will better equip the Omnicom Groupe to compete in a media industry that is increasingly dominated by data-driven analysis and automated trading of ad space on a global scale. It is now more likely that the trading and Nasdaq brokerage model is emerging as a new media/digital buying practice.” Fast times require fast action; good on ad giants like Omnicom and Publicis for staying in the game.
These changes may be exciting as far as the frontier of advertising stock promotion and the conjecture about how agency clients will get best value from multi-million dollar media buys. No doubt there is strength in numbers when bargaining with a network or syndicate as an agency having the most clients with the deepest pockets. Sure, get everybody on the same bus as long as that’s the best for each client seated on your bus. Does it mean all of their clients would be buying the same demographic? No. Does it mean everyone has the same media portfolio? Not necessarily.
But it does mean media is getting so complicated that machines are taking over the process of digital media buying. It will now be led by Data Scientists and programmers. This is high level stuff that multi-national agencies are needing to manage in real time on a world-wide basis. It does seem it requires the mission control of NASA to get your brand launched and landed safely. Or is this another form digital automation gone wild?
Creativity is about options and sometimes simple is better. Rather than riding in the big bus, just take a bicycle… get to know your market by taking the road less travelled. The old way of pushing out messages using big media is expensive and competitive. The advertising agency business first gained credit for being creative partners. This must still be an option! More companies are thinking of agencies today as both creative and digital partners. This is still the new frontier for digital advertising, but relevant relationships based on mutual interests are where smart companies are directing their efforts to intersect with customers.
More and more B2Bs are using a pull direction, being ‘in the know’ of what their customers want before they do, leading customers to what they need to know by informing, involving and inspiring customer dialogues. This is how B2B brands benefit from developing media and content recognized and shared for supplying the right solutions. Having the primary one-to-one, direct-to-client relationship is the highest order. Paid media from the push direction is an important supporting element, but you will always need to pay the gatekeeper to get to those audiences.
In a merger this size there will be conflicts of interest between clients who compete with each other. And there will be regulators who will want to make everyone feel due diligence has had its justice done. So it might take awhile before anyone knows how this will work out (estimate is 2014). Either way we can all see and say things are changing.
Traditional media giants are racing to keep pace with the new media upstarts who’s market shares are commanding a major lead in the of revenues of digital time and space. These are truly interesting times we live in. It comes down to what stock investors think is a better place for their money.
Your Turn
Would you invest in the new Publicis Omnicom Groupe, or in Google or Facebook? Who do you think will have more market value over the next three years? Share your thoughts and sound off in the comments below or on Twitter (@SterlingKlor).
