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La mort de POG – No more Publicis & Omnicom

No-More-Publicis-&-Omnicom_smallThere is a wonderful quote from the French poet Anatole France that goes “J’ai toujours préféré la folie des passions à la sagesse de l’indifférence”.  Translated it is “I prefer the folly of enthusiasm to the wisdom of indifference.”

In what was certainly a folly of enthusiasm, as well as apparently starting out as a joke, the massive merger between agency holding companies Publicis and Omnicom was called off on Friday.

We’re Going To Need A Bigger Ark

The merger would have created the world’s largest advertising group – with a market cap of approximately $35 billion and more than 130,000 employees across the world. Which, if you were counting, would have put them squarely in the top 100 employers on the planet ranking somewhere between Honda, Costco and Procter & Gamble in terms of size. Imagine that. What possible benefit would clients have?

The move itself was apparently conceived on a rooftop in Paris overlooking the Arc de Triomphe at the beginning of 2013.  (that should have been the first sign of trouble).  Commenting on the view, John Wren the CEO of Omnicom apparently said “this is priceless.” Standing next to him Publicis CEO Maurice Levy reportedly said “No so much. It can be yours.”

Six months later, they would announce their “merger of equals” on that same rooftop sealing the deal. But, yeah, there’s only one challenge with a “merger of equals”. You’ve got two of everything – and this ark wasn’t going to be big enough for the egos involved here.

Certainly as the deal comes undone and websites are updated, clients that were looking to have to go through agency reviews will (at least temporarily I suspect) sigh with relief as competing (read WPP) agencies sigh with frustration. With a number of competing brands sharing POG as a partner; including Coke and Pepsi and AT&T, Verizon, Sprint and T-Mobile, I suspect there was more than one WPP agency looking to put up a Powerpoint slide of “how strong is that wall in your agency?

The End Of The Beginning Of The End

As the respective companies continue to say “move along, be on your way, there’s nothing to see here” and talk about “new beginnings” the biggest takeaway is that this IS, sadly, just the beginning.

Publicis is almost certainly going to look to another deal as soon as it can. Interpublic is a holding group with some innovative agencies such as the Brooklyn based HUGE, and Deutsch and Weber/Shandwick – and is an interesting target for a still-frothing-at-the-mouth Publicis.  So is Havas with its Havas Worldwide brand and agencies like Atlanta based ignition.

And this is the troubling issue at large.

The advertising agency world is in a state of disruption. There’s no doubt about that.  As Ad Age said last year “the days when agencies expect multiple $100 million-plus agency-of-record accounts to go up for grabs each year are now barely visible in the rear view mirror.”  And I’ve talked about our own experiences here in previous posts.

Fragmentation and new models are emerging.  Last week I attended the Association of National Advertisers event in Florida – where 600 agency relations/agency procurement folk at the largest brands in the world heard Sarah Armstrong, Director of Worldwide Agency Operations for Coca Cola.  She was discussing their new Value Based Compensation and how they’ve made it work in 60+ markets across the globe.

Further, new competencies in digital, social, mobile (and yeah, content and experiences) mean that agencies have strategic disruptions ahead as well.

La mort de l’agence

So – are the giant holding companies a relic of the past?   Does it even matter at the agency level if they are owned by one of the larger companies?  Do brands even care any more? What does it mean for anybody who doesn’t work on Wall Street?

For brands – it actually may not matter (other than the aforementioned conflicts of interest).  But for agencies it does – especially those that are currently running to be more agile, flexible and actually looking to disrupt their business with the new types of relationships their clients are expecting. Anything that distracts from that mission is doing nothing productive for the business. And, trust me – acquisition is a distracting task.

It’s worth remembering that when Malory was writing his Morte d’Arthur, England was deep into the War of the Roses – which itself was a fight between internal factions trying to gain control of the throne.  It was exactly the same kind of infighting Malory created between rival groups of Arthur’s knights and family.  You know – the kind of infighting that eventually brought down his entire kingdom.


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