Mega Merger

Bert has Ernie. Batman has Robin. And now Publicis has Omnicom. Two of the world’s largest advertising agency networks are merging together to create the Publicis Omnicom Group. What does it mean for the advertising industry? Who owns who and who do they represent?

The Merger

On July 28th at 8AM Eastern Time, Omnicom CEO John Wren and Publicis CEO Maurice Lévy announced the two holding companies would merge to create the Publicis Omnicom Group.

In 2012, Omnicom’s revenue was $14.2 billion making them the second-largest holding group in the industry. Headquartered in New York, Omnicom operates in over 100 countries with some 5,000 clients. Their portfolio of advertising agencies includes BBDO, DDB Worldwide, Goodby Silverstein & Partners and TBWA Worldwide.

In 2012, Publicis Groups’s revenue was $8.5 billion making them the third-largest holding group, just behind Omnicom. Headquartered in Paris, Publicis Group’s agency network includes Leo Burnett Worldwide, Publicis Worldwide and Saatchi and Saatchi.

Conflicting Clients

With a merger of this scale its almost a certainty to have conflicting clients and its something that will need to be worked out as the process moves forward. Lets take a closer look at some of these conflicts.

Bud Light VS Miller Lite

Omnicom’s BBDO is leading creative for Bud Light, while Publicis Groupe’s Saatchi and Saatchi works on Miller Lite. Neither company has yet commented on the merger, however when it comes to these companies it might not be that big of a deal. Anheuser-Busch InBev, the world’s largest brewer and owner of Budweiser, has had StarcomMediaVest, a Publicis Group agency, run the U.S. planning for their beer brands.

AT&T VS Verizon VS Sprint VS T-Mobile 

Omnicom’s BBDO is lead creative for AT&T, while Publicis Group agencies work on Verizon, Sprint and T-Mobile. Zenith works with Verizon, Optimedia buys ad space for T-Mobile, Publicis is lead creative for T-Mobile and both Leo Burnett and Digitas work with Sprint. With AT&T as the lone exception, we have to wonder if the rest of the telecommunications companies will care much about this merger, since they have all previously worked with Publicis shops.

Coca-Cola VS Pepsi

Omnicom’s TBWA\Chiat\Day and 180LA both work on Pepsi creative, while OMD works on their global media. Publicis Group’s Leo Burnett works on Coke’s creative, while StarcomMediaVest works on their media buying and planning.

If history is to repeat itself then expect an agency review in the near future. In 2001, PepsiCo moved nearly $350 million in creative and media to Omnicom from Interpublic Group of Cos.’ Foote, Cone & Belding. While PepsiCo said the move was based on cost considerations the timing was very peculiar. Foote, Cone & Belding’s parnent company, True North Communications, was acquired by Interpublic Group. This acquisition also included McCann-Erickson, who at the time worked for Coca-Cola.

Neither company has commented on the merger, however we expect at least one to move shop. Even if Publicis Omnicom Group is the largest holding group in advertising, it still isn’t big enough for the both of them.

What They Are Saying

In their announcement the new co-CEO’s talked about the respect they had for each other and the excitement they have moving forward.

“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.”

However, not everyone thinks bigger is better. David Jones, CEO of Havas, let Twitter know his opinion on the merger by tweeting “Clients today want us to be faster, more agile, more nimble & entrepreneurial, not bigger & more bureaucratic & more complex.”

Is Independence the Answer?

Just days before the merger was announced, Dan Wieden, co-founder of Wieden and Kennedy, was addressing small agency’s at the fourth annual Ad Age Small Agency Conference. During his speech, he urged the crowd to start “sharpening their knives” as he called the giant holding companies “wobbling drunkards” who care more about stabilizing margins and maintaining client loyalty.

So what is the better solution? Is it best to have shops in hundreds of countries, each run by different people. Or is independence the answer? Lets take a quick look at one of the top independent agencies in the world, Wieden+Kennedy.

Wieden+Kennedy was founded by Dan Wieden and David Kennedy on April Fools day in 1982. They set up shop in Portland, Oregon, where they are still headquartered today. They remain the agency of record for their first client, a fitness apparel company called Nike. If you’ve ever wondered where the phrase “Just Do It” came from, you can thank Dan Wieden for that one.

Over the years they have opened up seven other shops in New York, Amsterdam, London, Shanghai, Beijing, New Delhi, and São Paulo. Today they work for several international clients such as Coca-Cola, ESPN, Honda, Old Spice, Chrysler and Heineken. Wieden+Kennedy has won award after award including being named creativity agency of the year by several publications in both 2010 and 2012.

Below we have listed a few of their best commercials:

Nike: Jogger

Old Spice: The Man Your Man Could Smell Like

This Is Sportscenter: Henrik Lundqvist

 

 

The Gillespie Group