The bottom line on the blow-up of the Publicis-Omnicom merger: This was a deal that didn’t have to happen—and it didn’t.
“I never saw this as a necessity for either holding company. This was about opportunity, not necessity,” said former CEO of Saatchi Japan and Saatchi Australia Brian Sheehan, who’s now an advertising professor at Syracuse University. “Both Levy and Wren saw this as an opportunity to round out their holdings and give them mega-offerings. It just took too long.”
Paradysz co-CEO Chris Paradysz, too, thought the dalliance was an exercise in futility. “Mergers can reinvigorate brands and bring about innovation, however if there isn’t a simple, yet compelling reason to meld two companies together, then the subsequent months of strategizing, communicating, and implementing will be a waste of time and money,” he observed.
Indeed, the world will get along without Publicis Omnicom Group in the opinion of most digital marketing experts we polled. “The calling off of the Omnicom-Publicis merger won’t have any immediate impact on the digital marketing business,” said Ignited’s founder and president Eric Johnson. “It maintains the current balance in the holding company universe, and we should expect each holding company to continue to follow their respective strategies.”
Both Publicis and Omnicom had let on that greater reach in digital capabilities, as well as forming a unified front against the marketing might of Google and Facebook, was a significant factor in the proposed merger. Digital marketers, however, were split on what the failed deal portends for their community.
“This is a watershed moment that shows size is not an advantage,” proclaimed Assembly CEO Martin Cass. “The breakup of the Publicis-Omnicom deal is validation that size does not equal scale.”
Richard Dym, CMO of digital marketing technology provider Gagein, held a similar view. “The collapse of the deal is an overall positive for marketers, agencies, and consumers,” Dym commented. “The competition-limiting impact of mergers like this can stifle innovation and increase costs, ultimately benefiting only the new mega agency.”
But Ted Murphy, CEO of IZEA, a social sponsorship company, thinks the biggest aftereffect of the failed merger will be the collective sighs of relief from employees and clients. “The net affect industry-wide is going to be minimal,” he said. “Had the deal happened, I expected to see considerable upheaval in the digital ranks. Publicis has the stronger digital portfolio and there would have been a certain amount of client defections and talent attrition in the collision of those two cultures. Now that the deal has been nixed, clients are likely to be relieved and talent is less likely going to need to find new jobs.”
Yet big agency holding companies won’t stop seeking to form beachheads against the gathering digital and social media forces, opines Larry Chiagouris, professor of marketing at Pace University. “Their original premise for the deal was to build the critical mass and size to compete with Facebook, Google and other big digital platforms,” Chiagouris said. “If that was the need several months ago, then, if anything, that need has increased. They have to be more aggressive, but it appears that Publicis and Omnicom let egos get in the way of critical need.”
Steve Denton, VP of marketing solutions at eBay Enterprise, is also one who’s convinced the agency merger and acquisition game won’t end with the Publicis-Omnicom flameout. “Coupled with last week’s announcement that IBM is now the largest digital agency in the world, this event showcases how evident the changing tides are in today’s complex landscape,” Denton remarked. “Technology companies are providing scale and efficiencies against media dollars as digital work is becoming critical. I predict that there will be more mergers of technology companies and agencies. The efficiencies an agency gains from a technology stack and data platform are essential to compete in today’s landscape.”