I had dinner with Maurice Lévy, CEO of Publicis Groupe, about a year ago in Paris. He’s physically an impressive, imposing figure. But equally impressive is his long list of accomplishments, building Publicis into the world’s third largest agency. With the news announced Sunday , he’ll now be the co-CEO of the world’s largest holding agency. Assuming it gets past regulators, this is a deal that has far-flung implications for the hundreds of smaller agencies that are part of Publicis Omnicom Group, its customers and partners.
Maurice is a “glass is half-full” type of guy. It was pouring rain as we had a drink on the Publicis terrace overlooking the Arc de Triomphe. I made a comment along the lines of “Shame about the rain.” And his response was one that I won’t forget. Without mincing words, Maurice let me know that when one has the luxury of an eye-opening view overlooking the world’s most famous boulevard and the Arc, a little rain should not detract from said view. And that optimism is what makes Maurice and Publicis take such big bets. There will surely be hurdles to make this merger work, but I can only applaud the boldness of the move.
What does it mean for partners, startups and other players in the ecosystem? I would argue that it won’t change much initially. With the deal expected to close late 2013 or early 2014, it will be largely business as usual for those of us who work with agencies.
On the other hand, expect to see some rival agencies make some big bets as well. As is natural, competitors like Havas, Dentsu, and WPP are surely now talking about consolidation, and we may see another big move to catapult WPP and Sir Martin Sorrell back into the top spot. If I was a betting man, I’d think Havas will be involved in the next wave of consolidation.
For Publicis Omnicom, the four big challenges I see are:
- Patience and Trust: Can they convince clients to stay patient and trust the combined entity while they work through merger hurdles. Patience as consolidation will take time. And trust because of innumerable client conflicts (Pepsi is with Omnicom, Coca Cola with Publicis). While scale is great, if clients as large as Pepsi or Coke leave, it does not matter.
$500M of Synergies Promised: That sounds like job cuts to me, but I hope not. “Time will tell if the cultures will click and whether clients and talent benefit -- and how $500 million of synergies will be generated without job cuts,” WPP CEO, Sorrell said in his reaction.
Speed: As the advertising world moves more towards digital, agility is the key trait that customers value in their partners and vendors. By joining forces, the ship gets bigger and more difficult to steer. How will Publicis Omnicom keep pace with smaller, more nimble agencies? How can they continue to innovate when the bureaucratic challenges of such a massive, combined entity has gravitational forces slowing things down? Not to mention two centers of leadership (in NYC and Paris).
Co-CEOs: I don’t think I need to comment on this structure. It’s going to be tough.
As for the rest of us - startups, partners, technology companies, I think it’s an exciting time to be in the advertising and marketing sector. The rate of change will be torrid, the move to digital faster than ever, and ultimately, consolidation may be a good thing. We’re already dealing with a myriad of agencies and holding companies, and we have more MSAs and NDAs than ever before. If we can start reducing and simplifying some of our relationships, it can only help.
For Omnicom, they get to take advantage of the digital expertise that Publicis has built over the years (including Digitas, Vivaki, Razorfish etc). At NewsCred, we’ve found Digitas to be the most digitally-savvy agencies that we’ve worked with, so if any of that can rub off on other units in the consolidated group, that would be great for everyone involved.
As someone who believes wholeheartedly in the notion of irrational optimism, I applaud Maurice and the good folks at Publicis and Omnicom who made this happen. With the sun shining in Paris and New York today, there’s plenty of reason for optimism.
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