Will clients reap the benefits of the Omnicom-Publicis merger?

The mega-merger of Omnicom and Publicis creates a huge advertising group with greater buying power and lower costs. But will its clients be reaping the benefits too, asks Ben Bold.

Touted as the "biggest ad deal in history", Omnicom's $35bn (£22.4bn) merger with Publicis has sent superlatives flying, most notably from the mouths of the respective agency groups' chief executives, John Wren and Maurice Levy.

So far, marketers have been less certain about how to respond. Predictably, brands are reluctant to offer an opinion on the deal. Coca-Cola and Unilever declined to comment, while a Procter & Gamble spokesman merely told Marketing the company would "work closely with Omnicom and Publicis Groupe agencies" to ensure a smooth transition.

John Lewis marketing director Craig Inglis is more forthcoming, revealing that the retailer would expect Omnicom - the owner of its ad agency, Adam & Eve/DDB - to have "greater media-buying clout in the market" as a result of the deal.

But Ian Twinn, public affairs director at ISBA, argues that greater buying muscle is not necessarily a boon for clients. "Agency groups are making less money in agency work and more in buying media space and trading," he says. "There are better margins." This focus on media is good news for big clients who rigorously audit their media, says Twinn, but medium-sized advertisers could pay more.

The merger is expected to cut $500m in costs. While Omnicom and Publicis will undoubtedly attempt to present that reduction as a positive for clients, Suki Thompson, founder and managing partner of consultancy Oystercatchers, is less certain that they will reap any benefits.

"If you look at mergers in other markets - banking or airlines, for instance - you can see how clients will make savings through efficiencies," she says. "But in a service industry, it's difficult to see how hard it will hit clients directly."

According to former Coke and Adidas marketer Neil Simpson, founding partner at agency The Corner, clients will be primarily concerned with the ability of their agencies to deliver on a day-to-day basis. "In terms of creative, I certainly don't see any benefits for clients," he adds. "The danger is, the bigger you get, the more cumbersome bureaucracy becomes."

Both Levy and Wren have insisted that they had informed major clients about the planned merger and do not anticipate big brands defecting to rival groups. However, at a press conference announcing the merger, Wren admitted that he expected some "difficulties". Foremost among these are possible tensions over client conflict. Coca-Cola, whose ad business is handled by Publicis' Leo Burnett, and Pepsi, whose account is with TBWA\Chiat\Day, suddenly find themselves closer. Other potential clashes include Unilever and P&G, McDonald's and Yum! Brands, and Mars and Nestle.

Experts believe that some marketers are likely to use the merger as an 'excuse' to review unhappy relationships with their agencies.

Experts believe that some marketers are likely to use the merger as an "excuse" to review unhappy relationships with their agencies, and WPP's Sir Martin Sorrell will be looking to pounce with his "team" approach, whereby brands such as Ford and Bank of America are offered a bespoke integrated marketing unit of talent from across its agencies.

Twinn agrees: "Levy has said that they will put 'Chinese walls' in place. However, if you're entrusting an agency with a brand, then it is going to have to know your strategic thinking over the next few years and be privy to some commercially sensitive stuff. That's a genuine concern."

Inglis, however, is more hopeful that the merger will not destabilise established brand-agency relationships. "It's really important that the brands that sit within the merged group are maintained so the clients can still have the relationships they trust and value," he says. "I guess the proof will be in the pudding. Hopefully, it will benefit us."

It may be the biggest ad deal in history, but it is far from conclusive that marketers will feel the benefits any time soon.

Discussion

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now

Latest

Oasis #springasmile digital campaign gets people doing good deeds
Coca-Cola: 'Don't approach bloggers with a fait accompli'
Tesco CMO Matt Atkinson: 'It is so important not to stereotype mothers'
McDonald's gives Ronald a new look ahead of global 'Fun times' social media push
In pictures: BrewDog opens first craft beer shop BottleDog for 'beer aficionados'
Facebook ad revenue leaps $1bn as it invests in targeting
Malteser or Maltesers? Mars takes Hershey trademark dispute to court
Apple Q2 profits top $10bn as iPhone sales soar
Lynx tells men not to leave love to fate
HBO captures awkwardness of watching sex scenes with parents
Primark to open first US stores with Boston chosen as flagship location
Marketing spend on the up but a reality check is needed before celebrating
Top 10 ads of the week: Jackpotjoy and BT Broadband fend off Kevin Bacon
Lidl beats Tesco to 10m Facebook fans
Center Parcs ad banned for encouraging parents to take kids out of school
Coca-Cola, Cadbury and Amazon named top brands for targeting youth market
Leaked document shows Nokia to be rebranded as Microsoft Mobile
Nike lays-off hardware staff in move that casts doubt on future of FuelBand
Greenpeace says save the bees or humans will die
What brands need to know about changes to VAT and online downloads in 2015
Jimmy Savile victims urged to claim compensation in new ad campaign
UKIP launches biggest  ad campaign and stirs up 'racist' accusations
Apple boss Tim Cook provides voiceover on ad touting firm's renewed green commitments
John Lewis walks consumers through its history to celebrate 150 years of business
Waitrose boosts content strategy with 'Weekend Kitchen with Waitrose' C4 tie-up
Hottest virals: Cute puppies star in Pedigree ad, plus Idris Elba and Fruyo
Amnesty International burns candles to illuminate new hope
Tom of Finland's 'homoerotic' drawings made into stamps
Toyota achieves the impossible by calming angry Roman drivers
YouTube reveals user habits to appeal to 'older' marketers