Omnicom + Publicis = Publicom & Much Ado About Shareholder Equity? What’s The Real Impact?

publicom-groupeThere’s never a dull moment in the advertising world. The proposed Omnicom and Publicis merger has everyone talking, but what (if anything) does this mean for the digital ad world? Who will be the winners and losers? What possible upside exists for the clients?

Having had the pleasure of working within large and small agencies (and having lived through many a merger), I’d like to share a summary of the collective voices in my head offering (sometimes conflicting) viewpoints of the potential victors and also-rans in the proposed union.

Clients

The mega agency pitch to clients is pretty simple: talent, pooled together in every aspect of digital, makes for a better client experience. Where reality takes a hard left from the pitch is right around fiefdom pass, but I’ll get to that in a minute.

The idea of having experts focused on search, email, and digital media buying is a sound and logical one. Large holding companies can also afford to have people who do nothing but think up creative new ways to sell the agency. Of course, there will be room for less of them now since consolidation is ahead.

Pay attention, because this is the important fiefdom part. I remember the first time an agency I lived in was acquired. We rejoiced in the sales pitch thrust unto us: everyone would be working together in harmony for the benefit of all. I called my mentor and first agency CEO to tell her all about how wonderful it would be. She laughed and explained why these things never work. Egos — and perhaps, most notably, senior managers whose financial self-interests conflict with the Marxist goal of creating the classless agency world — prevent collaboration at a level anyone could label a success.

I’m not seeing a huge win for clients in this joining together of Goliaths, but stay with me. We have a few other things to talk about before we get there.

Shareholders

When you get past the creative thought and execution (all too often, but not always) fairy tale, the corporation exists to benefit its shareholders. Since all you have to be able to do is spell “b-i-g d-a-t-a” to get a 10% stock price bump, the promise of pulling together the bits and bytes of every target audience member in the world is a big stretch.

Expect this to be big on fantasy, short on reality. Assuming regulatory approval, it will take years to sort out what the end agency product will look like. Agencies have been working hard at making themselves irrelevant by creating trading desks, attempting half-hearted moves toward embracing marketing automation, and otherwise negating the concept of an unbiased adviser — so don’t expect fast innovation on the big data front.

The major shareholders are the guys who don’t fly commercial, and they will be the biggest winners in the post-merger hypepocalypse.

Agency Employees

Yeah, these are the people who will likely get the old shaft-a-rooney. In the coming months, expect to see a lot of senior agency people beefing up their LinkedIn profiles and suddenly developing a need to showcase all the magnificent things they’ve accomplished while parked in the big shop garage.

How do you maximize shareholder equity for a corporation whose overhead consists almost exclusively of intellectual capital? You guessed it — hack away. A merger is a great time for management to offload anyone that might have any sort of talent or show signs of actually believing some of the hype being spewed unto the world by the MarCom people. Also, up-and-comers who pose a threat to corner office holders will likely get the boot.

Consultants

Oh man, these guys will make out like bandits. Expenses of all shapes and sizes get sliced up in a way that would make Fleet Street’s demon barber on a powder bender jealous. The consultants will be marched in — in droves — to help eliminate redundancies, decide on creative positioning and, in general, help figure out what to make of the mess to come.

Big fees and high-thought, low-tangibility deliverables are on the menu. Speaking of which, I can be reached at KMR@MotivityMa…

Society

Nope. I got nuthin’. There is no upside for humanity here. Maybe better ad targeting. We call that ‘”more efficient messaging,” and that innovation isn’t happening at the grey-flannel corporate level. However, it may free up enough money for the holding company to buy a clue or two.

Press & Digital Marketing Event Producers

Big holding company M & A is the gift that keeps on giving for people programming content at industry events and press. There will likely be no action whatsoever of any kind, but an awful lot of pontificating about what might be, from people who have no impact on agency direction and cannot directly impact stock prices thereby negating the concept of any sort of actionable information.

Strap yourselves in — we are a week into it, and no one is going to get bored with this subject any time soon.

Publishers & Media Vendors

I really hate the term media “vendor.” Who’s selling candy bars in the lobby? Not me. Agencies are starting to compete with publishers like Google and Facebook in the media sales department since so many have discovered the massive profit margins to be had by buying ad space for a dollar and selling it to clients for five dollars.

Small problem; if you are selling it, you can’t give buying advice. We call that a conflict of interest. But the auction model is the great equalizer, it eliminates the conflict. Sure it does. Like my dear old Dad used to say, “If it smells like horseshit….”

In the short term, the sell side will continue to see big gains while the “agency” struggles to redefine itself.

The Ad Industry

The agency model isn’t dead. The optimist in me hopes that it’s in its pupa stage. Marketing automation, big data assembly and the auction-based media model haven’t negated the need for good advice from 3rd parties whose only interest lies in helping their clients succeed.

Aside from divvying up the revenue conflict spoils, in all the press coverage about I’ve seen about this proposed action, I haven’t heard much about helping clients. Maybe that would be a good place to start.

Opinions expressed in the article are those of the guest author and not necessarily Marketing Land.

Related Topics: Channel: Industry | Internet Marketing Industry: Acquisitions | Marketing Strategies Column

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About The Author: is CEO of Motivity Marketing. Motivity ‘s focus is helping companies in the world of connected marketing move forward with greater impact and return than they may ever have thought possible. Kevin takes an active role in guiding the day-to-day strategic execution of client initiatives.




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  • Jenny Ciappa

    Ah, Kevin. Ya mean -it’s not for the Greater Good. If only.

  • Chris Elwell

    Great piece, Kevin. I suggest this creates great opportunities for the industry. A 1000 seeds will spring from this and clients will be better off, after some blood and gore.

 

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