12 Things Direct Marketers Need to Know about the Omnicom-Publicis Merger
(Photo Credit: Christian Hartmann, Reuters)
CEOs John Wren and Maurice Lévy dropped a bombshell on the agency world this past Sunday by announcing the merger of marketing behemoths Omnicom Group and Publicis Groupe to form Publicis Omnicom Group. The announcement led to an explosion of questions regarding what this union will mean for the marketing industry and how will the fused conglomerates harness Big Data for their clients. And just like with Big Data, it's vital for marketers to sift through the surge of information surrounding the merger and find the key insights of how this partnership will affect them personally. Here are 12 ways our industry experts predict this merger will affect direct marketers in particular.
As with most anything, there are pros and cons. “They will have greater resources and assets in order to assemble a more sophisticated, automated ad-buying platform that leverages audience attributes and real-time performance data to drive significantly better results at a lower cost. One would expect they will also be able to leverage greater volume purchasing and more strategic relationships from the likes of Google and Facebook,” says Paul Pellman, CEO of marketing analytics and optimization platform provider Adometry. “Possible downsides of this merger for direct marketers will be disruption as they manage the change process and try and create the promised synergies.”
It's just the beginning. “I'll bet you $1,000 right now that within 12 months WPP will have made a major acquisition or made a major merger—just watch,” says Larry Chiagouris, professor of marketing at Pace University's Lubin School of Business in New York. “They have to. They have no choice.”
Remember, it's not about what the clients want. “Direct marketers need to know that this merger brings about an effective duopoly in advertising. Clients are left with less choice, deciding between WPP or Publicis Omnicom Group,” says Redicka Subrammanian, CEO of digital marketing company Interakt Digital Communications Group. “Brands, behemoths themselves, turn to agencies to stay nimble, relevant, and innovative. When agencies also become behemoths, and lose that nimbleness with slower turnaround and delivery times, where is the value to clients? Ultimately, the merger presents an opportunity for employees to update their CVs and make extravagant demands while this newly emerged behemoth's success is threatened by the dangers of bureaucracy.”
Start packing your bags, small brands. “It's going to affect, negatively, the smaller brands because the smaller brands are going to be less important to the corporate holding company,” Chiagouris says. “You could have a large brand that is still overshadowed by a bigger brand. When the top people at the holding company decide which one they're going to throw their support to, it's going to be the one they make the most money from.”
They're together, but not necessarily stronger. “Digitas and Razorfish are both great shops in their own right, but together they are weaker,” says Paul Marobella, president of integrated marketing and advertising agency Havas Discovery. “Each has their own identity, unique core of what makes them stronger and surely their own P&Ls. And when P&Ls are involved, so go the egos. I can tell you that I will be watching their client base closely and ready to move.”
It won't revolutionize digital. “This is going to give the mega-agencies some leverage when it comes to buying TV, but its impact on digital will be negligible,” says Adam Kleinberg, CEO of interactive agency Traction. “It won't impact the cost of advertising on Google or Facebook exchanges. This move is about enhancing profit margins for conglomerates, not improving results for clients. This will particularly be the case when it comes to direct response marketers.”
It's a throwback. “It seems a bit odd that people are using the old "Walmartization" type blueprints, rather than learning from the Google, Facebook, Twitter, Vine, and Instagram—ones that have changed the industry,” says David Jones, global CEO of Havas. “If you're Walmart and you get bigger and bigger, your soap powder gets cheaper and cheaper—but it doesn't work like that in our industry. Brilliant ideas don't get better or cheaper because you are bigger. In fact, [it's] the opposite. And because of technology, the scale argument in media is now largely redundant. Facebook paid $1 billion to acquire Instagram when they had just 11 employees—that's about tech, not scale! Strikes me it's an industrial merger in a digital age.
It's also potentially a win for smaller agencies. “The top people are trying to create value for themselves and the shareholders. There will be downsizing, synergies, and cost cutting. As a result of that, there will be some shakedown of people and accounts,” says Al DiGuido, CEO of Optimus Publishing. “So if you're a mid-sized agency today with digital chops, innovation, from a sales standpoint, it's an opportunity for you to go out and seize the moment and work your way into some of those accounts.”
All the talk around Big Data is just big hype. “I've read about this whole idea that they've merged because they want to leverage Big Data. But if you're not leveraging Big Data within your organizations prior to the merger, you generally don't consolidate to become better at managing technology or Big Data. It seems like spin to me,” says Jon Morris, founder and CEO of digital marketing agency Rise Interactive. “Both of them already have access to so much data that they're not leveraging. So how is merging and becoming a larger enterprise going to help them out more?... It's basically two identical companies merging together. Not one person can point to the technology that Omnicom has or the technology that Publicis has that would speak to how this makes sense from a Big Data standpoint.”
But not all consolidation is bad. “Direct marketers should know that more consolidation within direct and performance marketing is where the industry is heading,” says Peter Klein, SVP of media for performance marketing solutions provider MediaWhiz. “Direct marketers should be asking their agencies and media buyers about the scale of their capabilities and reach, particularly at a time when customer acquisition is becoming so complex and fragmented. Consolidation, in many cases, will be a good thing, as it will particularly help the performance marketing industry, of which many direct response advertisers now place their ad dollars, mature, and stabilize. This, in turn, will provide greater value to clients who are seeking a more comprehensive, full-service approach to their customer acquisition needs.”
Real-time analytics is the future. “At the core of this merger is the acquisition of Publicis digital measurement and media buying capabilities and tools, something that has helped Publicis outperform the industry from a growth perspective,” says Mike Caccavale, CEO of multichannel marketing solutions provider Pluris Marketing. “These buying and measurement tools—and the move to more integrated analytics as part of a holistic view of the marketing spend across channels—are likely to dominate the future. Without significant investment from agencies, the Googles of the world are likely to drive through this gap in capabilities and continue to gain significant share while also easily moving to adjacent capabilities.”
Bigger isn't always better, especially when it comes to innovation. “It's not as if the combined entity is going to offer a more innovative value proposition to the data-driven marketer,” says Brian Deagan, cofounder and CEO of direct digital marketing service provider Knotice. “We believe this is more about global scale and efficiency and the potential increased leverage against first-party networks, such as Facebook and Google, which could radically change the media business over the next five years.”