Here are some thoughts on the planned merger of agencies Publicis Groupe and Omnicom Group.
During my career, I spent time working at agencies owned by both holding companies: Saatchi & Saatchi (Publicis), Trial DDB and OMD (both Omnicom). I also worked at Euro RSCG, which is owned by Havas, and Kirshenbaum, Bond & Partners, owned by MDC Patners. So I've made the rounds across the various holding companies. Based on my experience working in agencies and as a client who has hired many agencies, I do not see this merger as a positive. Why?
It's not about the clients. We hire ad agencies to develop creative solutions to complex business problems. When I hire an agency, I want the team to focus on my business. I don't want them to be distracted by holding company M&A activity that doesn't make a difference to my business. Also, when Omnicom-Publicis talk about efficiencies that will produce $500 million in savings, that means one thing—layoffs. When advertising people are threatened by layoffs, they'll often start talking to headhunters and looking for the next gig. As a client, having a lot of turnover on the team that manages our account is a bad thing.
The conflict mess. Bringing Omnicom and Publicis together will create a mess of client conflicts and have a big impact on the ability of any agency in the network to pursue new business. The agencies are going to spend more time figuring out creative ways to work around these conflicts than coming up with the big ideas to win the business.
Creative drain. Most of the creative people I've worked with in my career have little or no interest in working in large bureaucracies. The bigger these holding companies get, the more it will turn off the creative talent needed to attract clients. On the positive side, you'll continue to see a lot of the best talent fleeing from the holding companies to work at smaller shops or start new agencies. You'll also see a lot of clients leaving the big shops for the smaller shops.
No real efficiencies gained. Whenever a merger is announced, there's always talk of “efficiencies.” This always seems to be a primary justification for the merger. These companies will be better together. They will make more money and save more money. But the reality is that all these potential efficiencies are never realized. In all my time working for agencies owned by holding companies, I can't point to one single efficiency that I witnessed. I'm sure there were probably some back-office gains with employee benefits and real estate. But the holding companies were a nonfactor in the day-to-day business of the agency. I can't say that I even met a single person from the holding company during my agency days.
In response to the merger announcement, David Jones, CEO of rival holding company Havas, said in a statement, “Our business is very simple—it's about clients and talented employees—and as I said, I'm not sure this move is good for either of them.”
I tend to agree.
Jeff Perkins is VP-global online marketing at conferencing and collaboration solutions company PGi.