It's widely assumed that the Nos. 2 and 3 advertising companies
are early movers in an era of inevitable mass consolidation. That
buys into the premise that the merger can truly help them compete
with more speed, technology and breadth and others will have no
choice but to make their own play at scale. But questions clearly
linger over whether the company will be too big to succeed. And
most importantly, it still must prove what, if anything, this does
for the people paying the bills -- clients.
After a week to digest it all, here's what the deal gets them,
what it doesn't and what it says about the way the marketing world
is changing.
BIGGER DATA
Ninety percent of the world's data have been generated in the past
two years, said Mr. Levy, citing an IBM statistic to support the case for
the merger. And increasingly those data are generated by digital
interactions tracked for the primary, if not sole, purpose of
selling goods or services. This data-intensive world has ushered in
competitors that aren't ad agencies but giant technology and
consulting firms, like IBM, Oracle and Accenture. Of course, being
big (or bigger) doesn't magically grant a company data expertise,
make it a technology leader or help it produce better insights. But
increased scale could help Publicis Omnicom afford the
infrastructure and talent it needs to, as Mr. Levy put it, "build
something quite incredible in terms of crunching the data." Those
are investments procurement-focused clients aren't eager to
underwrite, and Publicis Omnicom will have a broader base of
clients to spread the costs across.
If successful, Publicis Omnicom could compete more directly with
the likes of Acxiom and Epsilon, top sellers of third-party
data and services to help companies manage their customer data. Or
it could buy up the competition. The holding company of the future
is going to have to make acquisitions, likely in the data space.
Combined, Publicis Omnicom could more easily absorb a bigger
purchase.
Still, Omnicom and Publicis will have to integrate their
existing data platforms -- a time-consuming and costly effort. And
brand clients are becoming more mindful of how their information is
shared across agencies, even in aggregate, which limits the value
of the data passing through a holding company.
WIELDING A BIG STICK
Publicis and Omnicom have been careful not to play up the
media-buying clout of their combined scale, perhaps because it
could be an antitrust red flag. But it's there. "We'll be the first
stop, whether you're starting a new company or you're a media
company coming to try to sell out the Grammys or the Super Bowl,"
Mr. Wren said. "The first place they will come -- every single
time, every single day -- is to us."
