This week began with a deal that will have major ramifications for the entire marketing profession. On Sunday (28 July) Publicis and Omnicom announced a £22.8bn merger that will create the world’s biggest advertising group.
Billed as “a new company for a new world”, the propsed new group promises to provide its clients – which include some of the world’s biggest brands – with “the most comprehensive offering of analogue and digital services” ever seen.
At this stage it is difficult to say with any certainty what this all means for the marketing industry. ISBA, the body representing British advertisers, has already expressed its concern at the size of the new group and the potential restriction of choice for advertisers.
There are fears too about the capacity for conflicts of interest. The group brings together a series of top agencies including Saatchi & Saatchi, BBDO, Leo Burnett and Starcom MediaVest, as well as competing client brands like Coca-Cola and Pepsi, McDonald’s and Yum Brands, and Google and Microsoft.
Publicis boss Maurice Levy was at pains yesterday to highlight both companies’ experience of setting up “strict firewalls” to protect client interests. He justified the merger by claiming that Publicis Omnicom Group will have the scale and clout to overcome the biggest challenges facing brands today – including managing the latest digital advances and the explosion of ‘big data’.
Consolidation is certainly one logical solution to the ‘big data’ question. Following the merger Publicis Omnicom Group will have an unrivalled mine of data across its agencies that will allow it to cross-reference hugely varied data sets and tailor reports for brands like never before. The deal also opens the door for the group to make major investments in its own technology platforms.
Keith Hunt, managing partner of M&A advisers Results International, notes that “the combined buying power of an Omnicom/Publicis behemoth would provide the funds to make significant acquisitions to deliver on any ambitions in this tech space”.
Yet there is no guarantee this will be the right solution for all brands. Data is one of the most important tools deployed by a brand – the vital intelligence that provides it with an advantage over competitors. That advantage is diminished if data services are normalised across a single ‘mega agency’ or if that agency lacks the agility to meet specific client needs.
Even if the firewalls work properly between brands, conflicts could arise between brands competing for the best possible data services under the same umbrella group. These are problems that executives at both Publicis and Omnicom will have to confront as they embark on their audacious new partnership.