Ad agencies’ tie-up a bold bet that size matters
Analysis: Publicis and Omnicom are billing the merger as ‘a powerful solution’ for clients
Publicis chief executive Maurice Levy and Omnicom chief executive John Wren shake hands yesterday after signing the companies’ merger, on the rooftop of the Publicis headquarters in Paris. Photographer: Balint Porneczi/Bloomberg
The merger between Publicis and Omnicom, which will create the world’s largest advertising and marketing services group by revenues, is a bold bet that size matters in a new media world that increasingly is shaped by technology.
Gone are the Mad Men days of the advertising world, when creative shops such as Publicis’s Leo Burnett developed campaigns for the Marlboro Man and Omnicom’s BBDO launched the Pepsi Generation. Today’s marketers are scrambling to connect with consumers amid the proliferation of media and mobile devices. A new crop of companies, ranging from internet groups such as Google and Amazon to newcomers such as Salesforce. com threaten to cut big advertising groups such as Publicis and Omnicom out of the equation.
They offer marketers revolutionary technologies to pitch their messages to customers in real time on television, the internet, mobile phones and digital billboards with analytical systems designed by actual rocket scientists.
“Lines have blurred completely, there are new competitors coming in every single day,” believes John Wren, the chief executive of Omnicom who will become co-chief executive of the new entity. “The pace of change which is occurring today is going to get faster, not slower.”
Publicis and Omnicom are billing the tie-up, which had combined revenues of $22.7 billion in 2012 and a combined market capitalisation of $35.1 billion, as a “powerful solution” for their clients that will create a “new standard” for the industry.
“Size will matter,” said Maurice Lévy, the chief executive of Publicis who will be the other joint chief executive of the new group. “What is true today is really not true tomorrow, and we have to be prepared for that.”
Wren (60) said that both groups have a history of striking ad buying and ad technology partnerships with new media giants such as Google and Amazon and that the merger will put the company in the position of creating more powerful solutions for clients. “None of us are going to be speaking about anything that isn’t digital three to four years from now,” he said.
Standing on the rooftop of Publicis’s headquarters at the top of the Champs Elysées, and with a picture-postcard view of the Arc de Triomphe, Levy (71) explained how the idea of the merger began. “This started on this roof . . . the Arc de Triomphe and, he [Wren] said “this is priceless”, and I made a joke. And we started to think.”