The $35.1 billion monster merger that
Omnicom Group and Publicis announced Sunday could send rumblings throughout the
digital-advertising landscape. While Google is the world's biggest digital-ad network, and
Facebook has shown encouraging gains in mobile advertising, based on its
financial results July 25, the specter of OmniPub, as some call it, could
eventually change all that. The combined company, expected to be called Publicis Omnicom
Groupe, will create an advertising megacorporation that would be the world's
biggest provider of advertising.
Publicis has been especially attentive to scooping up
digital-ad firms, such as Razorfish and Digitas, establishing it as a fledgling
player in that space. Omnicom, meanwhile, has preferred to work with technology
companies and build internal web capability. The deal can only cause consternation at Google, Facebook,
Yahoo, Apple and other tech titans fighting for a piece of the
multibillion-dollar online advertising pie. For many, success in online ad
selling is the Holy Grail for long-term success.
The merger of Publicis and Omnicom is yet another sign that
the traditional media and advertising business is being disrupted. When this
wave of consolidation is over, there will be just a few major holding companies
left. At that point there will be a holding company for each of the top two or
three brands in each category (auto, telecom, CPG, beauty, etc.), and then a
roiling, vibrant economy of emerging brands, independent agencies and new
technologies. The driving force behind holding company consolidation is
not the desire to align to the needs of mega-brand clients or to stop the
downward pressure on agency fees. If that were the case, holding company
shareholders would have demanded this merger years ago.
Publicis and Omnicom are merging because of us. Anyone who
has used Facebook, done a search on Google, or watched Netflix instead of
buying a local newspaper, using the phone book or watching broadcast television
has contributed to this merger. Omnicom CEO John Wren alluded to this when he
spoke to journalists yesterday: “We have many new competitors,” he said.
