Consultants Scratch Heads Over Publicis-Omnicom Deal

It’s early days, but consultants who help marketers find agencies are still struggling to grasp the strategic rationale for Omnicom Group’s mega-merger with Publicis Groupe. “The benefit to most clients is not apparent,” said Mike Drexler, managing partner of Drexler/Fajen & Partners and former U.S. CEO of Optimedia. “Not more nimble and responsive to marketplace conditions, not more innovative and creative thinking, not better resource integration, not more embedded in client business and not necessarily better media pricing.” "So far, I have not heard a single magical piece of logic that sums up the need for this transaction," said Hasan Ramusevic of Hasan+Co. "There has been a lot of chatter about the pros and cons, but most of those arguments represent potential outcomes of the merger and not the explanation for the merger." Echoing her peers, Judy Neer of Pile + Co. added that "right now I don’t see the value in it, except potentially for Wall Street and potentially for media." Richard Roth of Roth Associates acknowledged that the larger company may gain a competitive advantage in attracting top management, particularly with the lure of valuable stock options. But that won’t solve the industry’s larger problem of attracting a new generation of talent at the entry level, given that other industries still offer much bigger starting salaries, Roth said. “At the very top, they’re going to get paid more, but is that going to filter down?” Roth said. “The money is flowing uphill, not downhill.” Notwithstanding their questions about the deal, consultants like Russel Wohlwerth and Avi Dan expect the holding company merger game to continue. After all, the industry is growing at a relatively meager pace these days, and deals like this represent a shortcut to gaining market share. Still, in a blog post about the merger on Forbes.com, Dan, a former agency new business chief who runs Avidan Strategies, pointedly noted that such moves fail to address a “fundamental issue: The ad conglomerates are mature businesses, and profitable organic growth is harder to come by.” Ramusevic was even more blunt in his assessment of the merger, saying that it’s “about power and status.” “Maurice Lévy gets to build and retire atop the world’s largest advertising company. Sounds petty, but hey, if you have no desire to finish in first place, then why bother playing at all?” Ramusevic said. “And his never-ending quest for an heir apparent comes to a close as John Wren—arguably one of the best CEOs in the industry—will be in the driver’s seat and keeping a close eye on WPP in the rearview mirror, at least for now. “On paper, it’s a win-win,” he added. “But they’ve got to do a much better job at controlling the conversation and giving employees, clients and industry influencers a reason to believe that this is a good thing, or that it matters at all.”

Brand Marketing

Consultants Scratch Heads Over Publicis-Omnicom Deal

Where's the value for clients?

Andrew McMains

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Andrew McMains