A Critical View of the Publicis/Omnicom Megamerger through the Eyes of the Client

Posted by Taylor Haney on Fri, Aug 2, 2013

Not sure what to make of the recent Publicis/Omnicom merger? Get an inside look into what Larry Weber, Chairman of Racepoint Group and Digital Influence Group, makes of it all and his opinion on the overall potential outcome.

Larry Weber forwebLarry Weber, a globally known expert in PR and marketing, is passionate about the convergence of technology and communications. A frequent speaker on the future of marketing, Larry has authored four books on the topic, his most recent being Everywhere: Comprehensive Digital Business Strategy for the Social Media Era, published in March 2011. Connect with Larry on Twitter at @TheLarryWeber.

A lot has been said and written this week about the merger between Publicis and Omnicom.  Opinions have been expressed about the competitive aspects, client retention issues, cost cutting measures, the rational of big data, and the power of inter-agency synergies.  And while all of that is interesting, much of it misses the point. Because at the end of the day, this simply represents another push by the major holding companies to sell the market on the idea that they are the holy grail of providing comprehensive services on a global scale.

The problem with the premise is that it is deeply flawed.  It is simply a rehash of the late nineties frenzy that brought the industry a rash of global holding companies, deep promises and a lot of talent out on the street, without ever delivering on the promise of superior client service and output.  The only difference today is the acceleration of social and digital being at the core of all marketing disciplines and the impetus behind many mergers.

Don’t get me wrong… there is enormous potential in aligning earned and paid influence with a connective tissue of creative, analytics and social at the core.  In fact, just this month, I took the bold step of doubling down on this strategy by integrating two of the top agencies I founded – Racepoint Group and Digital Influence Group – into just that kind of integrated communications powerhouse.  I firmly believe that this is the construct that defines the present and future of the industry.   I just don’t think global holding companies are the ones who can make it a reality, and here are the reasons why:

  1. Customer at the Core: Like every merger in every industry, this one is framed as having the needs of the customer at the core.  Yet how can one argue that a merger boasting cost efficiencies of $500 million, in an industry where our core product is people, is going to benefit customers?  At the end of the day, the customer suffers by virtue of loss of talent at its agency.

  2. Nimbleness: As I evaluated while merging my own companies this past month, one of the key things I looked at was the ability to remain nimble in response to customer needs.  Today our customers demand, more than ever, the ability to deliver analytics-based, creative programs that capitalize on a fully converged paid, earned and owned distribution strategy.  It’s a simple vision that only becomes complicated if it’s part of something too slow and bureaucratic. Having bought and aligned dozens of companies as a top executive at a major holding company, I can attest, firsthand, nimbleness and agility are not the core attributes of large holding companies.

  3. Integration Pressure: Integrating disparate cultures and marketing disciplines is hard to do.  In fact, it is difficult to point to one major holding company that has succeeded in creating customer-centric integrated teams of advertising, digital and PR professionals.  Rather, it is the independent midsized agencies who are building lean, agile integrated units that reflect the evolving needs of our customers.  Given how many cooks there are in the kitchen, I have doubts that the Publicis Omnicom Group will have the ability to become a nimble, flexible entity without great toil and forced consolidation of redundant offerings.

  4. Shareholder Value: So why is it that these companies have such a challenge integrating?  Simply put, the need to support shareholder value trumps the need to make decisions that drive customer satisfaction.  If every unit within a company is helped to an economic goal, each unit is included to protect revenue at the cost of its sister companies and, more importantly, its customers.  This negates any emphasis on integration of services.

I wish the holding companies well.  Their success will result from their ability to execute on a vision that I strongly believe represents our industry’s best future.  I am just skeptical that at their size, scale and origin they can pull it off.  When I look at how this has been talked about, it looks like just another power play by big advertising agencies claiming their stake in digital and social as a tactical means of establishing continued relevance.  Yet I see the action as an affirmation of a vision I’ve had for the industry for years… one in which earned and paid influencer relations merge into one, supported by analytics, creative and technology.  I just believe nimble, independent agencies are far better positioned to deliver on this ask.