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  • Posted on 2 August 2013

Omnicom-Publicis merger: after the theory, what about the practice?

by Tim Ringel, CEO at NetBooster Group

Since Saturday, the birth of the new advertising’s juggernaut has shaken the communications world up. By getting close, Publicis & Omnicom have built the biggest advertising group in history, hiring more than 130.000 people.

Economies of scale have not been efficient as far as Media agencies are concerned. In this way the merger is more than just financial.

Size does not raise the margin. However it can give an additional advantage regarding advertising sales agencies, and this exact advantage can in fact be questioned.

Today more and more inventories are auctioned to more and more promotional tools, excluding any attempt of negotiation on volumes. An advantage like this might allow the group to win some exclusive contracts with a few sales agencies, but the impact won’t be that important.

What about data?

As data dominates the digital world, agencies must equip themselves with substantial technological resources. In this way the merger will allow Publicis Omnicom Group to keep pace with the Internet’s giants like Google, Facebook and Yahoo!, but only if its data transformation is successful.

The best advantage of such a merger relies in its theoretical capacity of technological platform Vivaki’s mutualization (AOD, AODV, Qsuite, benchtools…). Indeed the platform’s investment capacities increase as its number of clients doubles.

We might think that with its bargaining power, this new player would lock positions and snap up a considerable part of the advertising inventory, damaging in this way the other agencies. But thanks to new technologies like the adexchanges and “cloud computing” the inventory is more and more volatile. That is the reason why innovation now comes before scalability. The success of startups such as Criteo and RocketFuel clearly proves it.

After all, Publicis Omnicom Group’s coming to the market isn’t such a bad news for independent agencies, provided that they remain mobile and inventive. Their true strength relies on their ability to implement innovative tools and methods in order to buy better, faster and with more efficiency, while shortening the pathways between idea, creation and media exposition. The deployed strategies are thus more hard-hitting.

Let’s get the competition (re)started!

Posted by Caroline