At the Press
Conference Sunday, we heard the usual bla-bla that goes with the announcement :
it is a merger of equals, John and Maurice became real friends, the cultures of
the companies will be respected, the combined companies will have a more
complete client offering, this will create opportunities for employees and
value for the shareholders, etc…
Dance
with the Internet Giants
After over an hour, we
finally heard the real reason: Size matters because we have to face Internet
Giants. And it is not about Media bargaining, it is more vital than this. Today, the Googles of this world have dramatically
changed the rules of the game and the roles of the players. Big Data is
competing with Big Idea. If the Agencies want to survive, they better take this
into account: and ain’t not cheap.
At this challenge, Publicis
is the strongest and competes fiercely with WPP. Martin Sorrel was the first
mover and deliberately ran a strategy of acquiring Consumer research
capabilities (Kantar, TNS). Maurice Levy quickly competed on the Digital side aligning
Digitas, Razorfish, Rosetta, Lbi in front of 24/7, Possible and more recently
AKQA. During this 10 years competition, Omnicom has been very quiet. John’s
Wren strategy has been to let his creative networks integrate their own digital
capabilities. With mixed successes: Integration of Tribal DDB, BBDO Chemistry are
still to be completed as the culture of these networks are creative. So the
merger creates opportunities for Omnicom to join the race.
Also, it will create a
geographical balance. Publicis has been very active in growing its presence in
emerging markets and relatively weak on the US market, while Omnicom main strength
still is USA. I remember Jean Marie Dru when CEO of TBWA, telling me: “Whatever I do, in my daily To Do list,
7/10 items refer to a US client”.
Merger
of Egos
Sir Martin Sorrell reacted to my question: “Co-CEOs is not an easy structure. 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.”
Of course, Omnicom and Publicis growth strategies
were drastically different. Being in a public company, John Wren favored short
term results and reluctant to invest in high priced ventures while Publicis
family management culture was more open to long term investment. Also, I can
see differences in their management styles: Wren’s management philosophy is to
hire and delegate to the right talent while Levy’s reputation is to micro
manage the business. Nevertheless, I can
see a management style which strongly unite them: When it comes to money, both
guys are control freaks! And their teams are trained to it!
And
now, What!
Miles Nadal rejoices as he sees this as a “huge opportunity for MDC ‘s Reputation as “The
PlaceWhere Great Talent Lives” creating Value Added for the Holding Co and its
partners agencies”.
Continuing to quote
Martin Sorrell: “Further consolidation in
our industry was inevitable as we have said on many occasions. An equilibrium
may be starting to be established, which will generate further significant
opportunities for WPP” He adds: “organically!”
So let’s wait for the
next “inevitable” consolidation. Looking at mere facts, Sorrell could buy IPG
to remain number one. He would acquire some jewels such as R/GA, Huge or
Wunderman and increase the WPP Revenue split in the US. Unless he agrees with David
Jones that “It sounds like pigs are
flying” and offers Vincent Bolloré the opportunity to sell Havas and make
the high return deal Bolloré has been suspected to target for years.
"Excuse my French!" as Maurice would put it. "Your service, Martin!"
