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Publicis Omnicom Merger - Market Wrap



There's been much speculation and opinion since the two super powers of the advertising industry - Publicis Groupe & Omnicom - announced their intention to merge to form the Publicis Omnicom Group in July 2013 - and more recently in April 2014 as the potential relationship struggles.  Now in May 2014 the merger is off.

Here we highlight articles and opinions, from both overseas and our Australian market, to bring you up to speed...

9 May 2014 - the merger has been called off...MediaScape - Major Australian Media Agencies

Will Publicis Groupe Now Attempt a Hostile Takeover of Omnicom? - (AdWeek) Paris investment bankers Natixis have put forth an intriguing scenario that explores the possibility of Publicis Groupe launching a hostile bid for Omnicom, asking: “Is the story over?”

The Lesson From The Omnicom-Publicis Fiasco: Big Is Not A Strategy - (Forbes) In the world today, where Instagram runs 200 million users with 45 employees, the rules of the game have been changed by fast moving digital realities. WPP has 175,000 employees and a market cap of $29 billion. Google has 47,000 employees and a market cap of $353 billion. Scale is not as relevant as it once was.

  • Publicis and Omnicom Call Off Mega-Merger (via AdAge) - Deal to Create World's Largest Agency Company Crashes and BurnsMore than nine months after announcing a plan to team up in a $35 billion "merger of equals," Publicis Groupe and Omnicom Group have called off the deal, the companies said Thursday evening.
  • Publicis Omnicom Merger Called Off (via Mumbrella) - The massive proposed merger between holding groups Publicis and Omnicom has been called off. The deal, which would have created the largest advertising holding group in the world with assets worth more than US$30bn eclipsing WPP, hit the rocks in the US with a slow pace of progress and trouble getting regulatory approval in some countries behind the decision.

April 2014 - as the proposed merger hits roadblocks...

  • Lots Of Screwing But No Marriage (via The AdContrarian) - "Well, the big news this weekend was that the honeymoon between Omnicom and Publicis seems to be in trouble before we even get to the foreplay. According to The Wall Street Journal - "...battles over position and power are threatening to upend the slated $35 billion "merger of equals" between advertising firms Omnicom Group Inc. and Publicis Groupe SA." Battles over position and power? In an ad agency? You mean it's not "all about the work?" Well fuck me blind. Back in July, almost a year ago, the two blundering behemoths decided it would be a good idea to get married. The rationale? Some idiotic nonsense about "big data." The real reason? Corporate ego. These guys don't like the idea that Sir Martin has a bigger one."
  • Publicis-Omnicom deal hits problems: Will squabbles upend the big merger? (via The Drum) - "The merger supposed to create the world’s biggest advertising group is in trouble according to reports. “Battles over position and power: are threatening to upend the slated $35bn 'merger of equals' between advertising firms Omnicom and Publicis," says the Wall Street Journal."
  • Clashes Over Power Threaten $35 Billion Ad Agency Merger (via WSJ - purchase required) - "Executives From Omnicom, Publicis Said to Disagree on Future Roles, Who Is the Buyer.  Battles over position and power are threatening to upend the slated $35 billion "merger of equals" between advertising firms Omnicom Group Inc. and Publicis Groupe SA. The two sides have said that legal and tax issues in Europe are delaying the completion of the deal, first announced last summer. But beyond those difficulties, relations have severely frayed, say people with knowledge of the situation."
  • Are Omnicom and Publicis Laying Grounds for a Divorce? (via AdWeek) - "Suddenly, merger obstacles are looming large - By raising tax domicile issues related to its megamerger with Publicis Groupe, Omnicom Group has drawn a line in the sand. And in doing so, the American company has only fanned speculation of mounting marriage troubles, with CEO John Wren stressing to investors that there is no “Plan B” should the combined company fail to establish U.K. tax residency and incorporation in the Netherlands."

July 2013 - as the intention to merge is announced....

  • Advertising Industry Gives Up (via The AdContrarian) - "I would like to be all outraged and upset by the announcement that Omnicom and Publicis are merging. But I can't. It is just the advertising industry's way of telling us that it has joined the parade."
  • Two Ad Giants Chasing Google in Merger Deal (via NYTimes) - "The announcement on Sunday of the merger of two industry giants, Omnicom and Publicis, to create the largest ad company in the world, signals that advertising is now firmly in the business of Big Data: collecting and selling the personal information of millions of consumers."
  • Publicis-Omnicom Merger to Reshape the Marketing Services Industry (via Gartner) - Continue to insist on price transparency in digital media trading desk activity. Since digital media is often priced at auction, scale-based buying power plays less of a role than in media like TV. Review data ownership and usage agreements with agencies in light of their apparent inclinations to grow proprietary data assets.

And Locally:

  • Creating a Monster: How Will Publicis-Omnicom Local Limbs Be Stitched Together? (via Adnews) "As a media group, Publicis Omnicom will have a combined Australian market share of 31.6% with billings of $2.8 billion, according to 2012 RECMA figures. Using the same data, GroupM has 27.7% and $2.48 billion billings; Dentsu Aegis has 19.1% share and $1.7 billion; while IPG billings stand at $1.14 billion and 12.8% market share."
  • Steedman:  Massive task ahead for Publicis Omnicom (via BandT) - "GroupM CEO John Steedman has warned rivals Publicis and Omnicom that they face a long hard road ahead attempting integrate two very different cultures while looking for $500 million in “efficiencies” after the two announced a merger."

Also See:

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Further Resources

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