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Publicis Omnicom optimistic on digital, but is digital a space where bigger is better?

In the various statements that Maurice Levy and John Wren, the to-be Co-CEOs of Publicis Omnicom Group, have been quoted on, the mention of the Group’s strength in its digital offering is consistent. The press statement by Publicis Omnicom Group stated that amongst other things, the newly formed entity would be the “world’s leading company in digital services”. In addition to that, most observers have also highlighted the fact that the scale that the two companies bring together will impact digital media owners significantly, and some even said that now 70 per cent of digital business would be between the top three companies and this would have consequences in influencing digital media owners.

Is bigger better in digital?
While Publicis has a host of digital brands like DigitasLBi, Razorfish, Rosetta and also VivaKi, Omnicom’s brands that compete in the digital space include the likes of Proximity, RAPP and Tribal DDB amongst others. Needless to say that the mainline agencies from both Publicis and Omnicom have worked to develop digital at the core of their offer as well that cannot be neglected in today’s environment. But this is also true for rival groups WPP and also IPG. Digital is the buzzword across agencies (Ogilvy, McCann, JWT, GroupM, IPG Mediabrands) for these holding companies in addition to the standalone digital brands (AKQA, Salmon, HUGE, R/GA), which either by acquisition or by evolution have created a reputation for themselves in the digital world. On the face of it, there is no clear indicator to state that the merger has definitely brought better digital brands under the same roof.

What role did digital play in driving this merger? In a conversation with DMA, David Cooperstein, VP, Practice Leader for CMOs and Marketing Leadership, Forrester Research explained, “This deal will have impact at three levels – scale across all media buying including television, print and digital, due to the amount of media spend by the new entity on behalf of their clients. More money to be spent on systems to buy this media on a programmatic basis, using tools from the Annalect and VivaKi entities and finally, more opportunities to be a strategic influence on digital media sellers such as Google, AOL and Yahoo, as they represent a larger variety of clients. That should lead to better attribution modelling to support digital (and offline) ad placements.”

The advertising world however, would like to bring attention to scalability, a new found power in the digital era versus scale that still has a traditional or analogue ring to it. “Our focus has always been about scalability over scale, and how our offerings can better serve the needs of our clients,” said Tim Andree, Executive Vice President, Dentsu Inc (also, Executive Chairman, Dentsu Aegis Network and President & CEO, Dentsu Network).

In an earlier interview with DMA, Mr Andree had explained that the old, pre-internet protocol world was built for scale. With the advent of internet enabled media, the way to focus on scalability has changed. He said, “The way we see it is how to structure our hubs and be nimble in moving knowhow and capability around markets. We are trying as much as possible to view the world in the 21st century. Dentsu is the first fully scaled global communication competitor that is built since the advent of digital and that is our advantage.”

Bringing a similar thought to the conversation, IPG’s CEO Michael Roth said, “Our focus is and will remain on our clients and our people – which are the strength of our company. There’s nothing about scale that makes for better creative ideas, or leads to better integration of marketing disciplines. We are confident in the quality and competitiveness of our digital and media offerings, and well positioned in emerging markets. Ultimately, we’re all about our clients’ success and we intend to keep it that way, so that we can in turn build on our positive momentum in the marketplace.”

The jury hence is still out on what would be different about the digital service of Publicis Omnicom Group that can create further impact in this already dynamic space.

Impact on digital media owners?
The other important question that emerges in Mr Cooperstein’s statement is the impact on digital media owners, whose revenue models are still dependent on advertising significantly. How does ‘scale’ make a difference to them? Does this development redefine the manner in which digital media owners will be impacted given that volume of the digital business now is with two or three companies? “Very possibly,” replied Mr Andree, and added, “But that will depend on the strength of the relationships as well as the size. Dentsu has the benefit of thinking not only as an agency, but also as a media owner, so we have a great respect for what our digital media partners do, and we are constantly looking for new ways to partner and innovate with them on behalf of our clients.”

“Digital is not a space where you can look at scale benefits, especially when you are an agency,” said an APAC digital media owner, explaining, “Look at what happened to GroupM agencies when, not so long ago, they were charged with arbitration in the digital space. Advertisers do not take that well from their agency. A marketer may still be willing to listen to a Google or Yahoo when it comes to buying bulk digital media inventory, but not when it is coming through its agency because it is perceived to lack transparency. In the agency world, if you have to offer effective digital solutions for your clients, you cannot be dependent on scale. Digital media, unlike television and print, has to be a two-way road at the end and you have to get the full cooperation of the digital media company. Can there be strategic influences, perhaps but it will still come down to individual relationships.”

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