Adland Shock at Omnicom Publicis Merger

July 28th, 2013 by Rob Brown

Levy and Wren

The scale of incredulity that greeted the news that started to emerge this weekend over the rumours that Omnicom and Publicis were set to merge was summed up in a tweet.   David Jones the CEO of Havas  the 6th largest global advertising and communications network and No. 2 in France behind Publicis posted a tweet on Saturday saying:

Publicis Said to Be in Late-Stage Merger Talks With Omnicom – via @BloombergNowbloom.bg/16k7380 – oh wow just saw a flying pig.

Twenty four hours later the pigs were airborne as Maurice Lévy and John Wren were confirmed as joint CEOs of what is now the world’s largest advertising and communications group.

 

The CEOs said jointly: “For many years, we have had great respect for one another as well as for the companies we each lead. This respect has grown in the past few months as we have worked to make this combination a reality. We look forward to co-leading the combined company and are excited about what our people can achieve together for our clients and our shareholders.”

The announcement also suggests that the new combined company is expected to generate efficiencies or cost savings of $500 million/€377 million.

The surprise in adland is matched by some scepticism. David Jones again: “Obsession with mergers & acquisitions still amazes me…digital & technology have made scale irrelevant.”

Update 10am 29.7.13

As the shock subsides I’m indebted to Mark Pinsent for pointing out that I haven’t provided a point of view on the merger. Well here goes.

There’s no doubt that seismic changes in communications in the last decade have rocked the advertising world. Consolidation was inevitable. Consolidation must be on the cards with £500 million of “efficiencies” promised in the announcement.

Whether this was a good deal, as ever, you have to ask for whom. If the goal was to create the biggest marketing communications group in the world merging the 2nd and 3rd agencies is a hard trick to pull off. For Maurice Lévy and John Wren, and especially the former, this was an amazing deal. However there may well be client fall out, restructuring and potential erosion of value. In the final analysis the creation of the Publicis Omnicom Group may be at best as Martin Sorrell describes it a ‘nil premium merger’.

About Rob Brown

Rob Brown has worked in PR for over 20 years and for over fifteen years held senior PR positions within three major global advertising networks; Euro RSCG, McCann and TBWA. He launched his own business ‘Rule 5’ in MediaCityUK, Manchester in November 2012. Rob is the author of ‘Public Relations and the Social Web’ (2009), blogs for The Huffington Post and is joint editor of ‘Share This Too’ (2013).

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