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Undercurrent: PubliCom – Starkly divergent DNA, one consolidated strategy

Arnab Mitra, LIQVD Asia

The weekend’s highlight for most of us had to be the Publicis Omnicom merger. Not just because of the magnitude of the development itself but also because the two companies chose a Sunday morning to make the announcement. Before we look at the development closely, credit is due to both Publicis and Omnicom that they managed to keep the action under a tight lid, especially when both CEOs Maurice Lévy of Publicis Groupe and John Wren of Omnicom admitted that the talks between the companies were ongoing for nearly six months before the official announcement.

Some international press even flouted initial reports on the development to call it unlikely. Not so unlikely right now, is it?

Moving on to this latest merger in the advertising and marketing business, the previous one this year being Dentsu and Aegis, the one thing that most would agree on is that the two companies – Publicis and Omnicom – come with starkly divergent DNA and hence what lies ahead is a clearer consolidation strategy of two extremes, especially when it comes to growth avenues. For instance, Publicis is known for its overzealous merger and acquisitions strategy without necessarily a clear pathway and Omnicom on the other hand is known for an over-conservative and frail strategy. The combination hints at a balance (hopefully).

There are in fact more reasons why this might work, than not. Let’s take market strategy as another example. Lévy is relatively weak in the USA but has emphasised emerging markets and put his money where his mouth is with expensive digital acquisitions such as Digitas, Razorfish, Rosetta, Big Fuel and LBi.

Wren is archetypal American – over 50 per cent of his business comes from the USA; he has shied away from digital acquisitions, which he regards as over-priced, and some (including shareholders) would argue that his conservatism, or complacency, has cost Omnicom dear in the Far East.

So different strategies, yes. But incompatible ones, no. On the face of it, it is easier to see why the initial reactions from most would be that this marriage makes sense.

Despite comments made on the combined talent pool, combined client roster and so on, the biggest takeaway would have to be scale. Sometimes however, scale is not the best thing to focus on because leaving the businesses with accountants at times results in intellectual mediocrity. But when one is looking for large global partners (read banks for funding media practices), the unfortunate truth is that the battle boils down to which group is least uninspired at a point in time. This perhaps explains some semi-decent run on the bourses.

So, whether this combined scale benefits the companies into evolving to a bigger and better entity, is still a wait and watch. The merger also does not take away from the wait time for bigger media vehicles to go fully digital. As I see it, interesting times ahead with competition coming from new directions!

Arnab Mitra

The author, Arnab Mitra, is an Editorial Consultant with Digital Market Asia