What’s On

“An equilibrium may be starting to be established” Sir Martin Sorrell on Publicis Omnicom

Sir Martin Sorrell, WPP

At the press briefing on July 28, 2013, both Maurice Lévy (Chairman and CEO – Publicis Groupe) and John Wren (CEO – Omnicom Group) reiterated that the coming together of the two global behemoths to form the world’s largest marketing and advertising group did not take away from the fact that rival WPP with its CEO Sir Martin Sorrell is a “very strong competitor”. “We respect WPP enormously,” Lévy had stated in the presser. And for Sir Martin, Maurice Lévy “is to be congratulated” on the deal.

In a comment to DMA, Sir Martin said, “It’s an extremely bold, brave and surprising move. This is a great deal for Publicis, being a nil premium merger, and Maurice is to be congratulated.”

Sir Martin also pointed that the development does result in lower fast-growth market and lower digital proportions. He added, “Time will tell if the cultures will click and whether clients and talent benefit, and how USD 500 million of synergies will be generated without job cuts.”

Mr Wren admitted in the press meet that the group does expect to find “commercial difficulties” when it comes to clients but he added that those decisions would be made on a case basis when the time comes.

While both Mr Wren and Mr Lévy stated that there would be no job cuts as fallout of the deal, most market experts are looking for answers on how the USD 500 million savings mooted in the announcement would be achieved. The company officials did not offer any further explanation on this aspect but this part of the development is not seen favourable towards Omnicom at the moment by industry observers.

Another key announcement of the new structure of Publicis Omnicom Group is the Co-CEO structure initially. Mr Lévy and Mr Wren will lead the company as Co-CEOs through an initial integration and development period of 30 months, following which Mr Lévy will become non-executive Chairman and Mr Wren will continue as CEO. On the new structure, Sir Martin commented, “Co-CEOs is not an easy structure.”

The final point that Sir Martin makes is of consolidation and equilibrium. He said, “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 organically.”

The merger may have created the largest marketing and advertising services group globally in the form of Publicis Omnicom Group, but in key markets in Asia such as China and India or even emerging markets such as Indonesia and Vietnam, WPP continues to be a much larger entity than Publicis Omnicom Group, courtesy WPP’s early investments in the region and the constant drive of its companies to grow its business here. This is just one of the reasons for Mr Lévy and Mr Wren to acknowledge that WPP is a strong and respected competitor for the new entity.