Analyzing the merger of Publicis and Omnicom

Analyzing the merger of Publicis and Omnicom
Analyzing the merger of Publicis and Omnicom

On Saturday it became official that until now was only a juicy rumor, the fusion of American Omnicom Group and French Plublicis Groupe, which are the second and third largest advertising companies in the world, becoming a stroke and conglomerate resulting: Publicis Omnicom Group, in the first advertising company in the world, ahead of far number one, British WPP by Martin Sorrell.

This merger has left more than one with his mouth open, and no wonder, because it is not usual to see operations like this size, and even less that two historic rivals join forces in a merger, which it seems, this time if a merger, and there is a company that buys the other, as often happens in these cases. But if we put ourselves in context and see how it is changing the advertising landscape, perhaps we can advise what may have been due to a move of this magnitude.

When you are a leader and you have made ​​your leadership, do not become preoccupied with a mega merger of 130,000 employees, with all that this implies, to join your opponent. And the operation smells somewhat of desperation, and not just because their CEO needed respite for their retirement, as discussed.

As well say in Marketing Directo, the typical pattern of these large agencies, has always been based on buying other companies, acquiring customer base and getting fresh creative talent to convince advertisers to raise cash after the management of the buy advertising media. Especially in the management of traditional media, which are inefficient by definition, and implementation capacity of these giants was crucial, but after this movement, may be indicating that it is coming to an end.

Looking at the new global advertising stage being formed after the merger seems all the more atomized, which will change the game again, especially for offline, where there will be less choice for advertisers and conflicts of interest arise.

And with the digital advertising market upward, these giants are not so much, as it turns out in digital growth is expected up to 90%, which the rest are expected decreases or increases in single digits. Also in digital, already seated leaders like Google and Facebook, that only the market capitalization of Google and almost 10 multiplies the resulting of this conglomerate.

As said the great article from Mariano Amartino, these Internet giants are clear winners, since not only are digital natives and therefore advantaged in the new landscape, but they are their own environment and its own technology are because they have the ability to manage their own advertising space to third parties without also reaching the long tail directly and inputting the bulk of global advertisers.

In short, this merger is just a notice to mariners, and probably the first of many others, and these changes are going to continue to observe in the field, which will surely cause the purchasing model talent and customer base, existed until now, go to purchase digital startups technology and digital approach. Because, as I said once, although the big play with a disadvantage, always find ways to move forward.

What do you think of this operation and its consequences? Do you think that will bring something good? What do you think will be the next surprise?

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