Somewhat relevant to a previous blog post that focused on the size of corporations in the current media landscape, the merger that was announced between Publicis and Omnicom Group, two of the advertising industry's agency holding companies, fell through. After 9 months of work to arrange the merger, legal and tax issues as well as competitive disagreements likely led to the breakdown in talks. Whatever the case may be, it begs the previously asked question, is bigger necessarily better?
In this case it appears that bigger was not better. Whatever the circumstances, when two entities that large attempt to combine in order to increase shareholder value there will be obstacles and questions. Publicis Omnicom would have been an enormous entity that could have sucked the creativity and competition out of the industry and all the agencies that fall under their umbrella. A key driver in the advertising industry is creative competition and though the companies and clients would have been able to function properly and competitively for the most part, there would be questions and potential fallout from clients in response to the deal. WPP and Interpublic, the primary competitors to Publicis and Omnicom have seen shares increase since the deal was announced, so from a financial perspective this was not even a sound idea.
Sending a financial earthquake into the center of such a creative and volatile industry was not a good idea from the outset because this is an industry that cannot solve problems by stacking more dollar bills together. I think the future will continue to see large companies rule the field but the industry will still see disruption form the independent underdogs like Wieden + Kennedy and The Richards Group. These small players will make a difference in the media landscape that is yet to unfold.
Source:
http://adage.com/article/agency-news/publicis-omnicom-call-mega-merger/293119/
In this case it appears that bigger was not better. Whatever the circumstances, when two entities that large attempt to combine in order to increase shareholder value there will be obstacles and questions. Publicis Omnicom would have been an enormous entity that could have sucked the creativity and competition out of the industry and all the agencies that fall under their umbrella. A key driver in the advertising industry is creative competition and though the companies and clients would have been able to function properly and competitively for the most part, there would be questions and potential fallout from clients in response to the deal. WPP and Interpublic, the primary competitors to Publicis and Omnicom have seen shares increase since the deal was announced, so from a financial perspective this was not even a sound idea.
Sending a financial earthquake into the center of such a creative and volatile industry was not a good idea from the outset because this is an industry that cannot solve problems by stacking more dollar bills together. I think the future will continue to see large companies rule the field but the industry will still see disruption form the independent underdogs like Wieden + Kennedy and The Richards Group. These small players will make a difference in the media landscape that is yet to unfold.
Source:
http://adage.com/article/agency-news/publicis-omnicom-call-mega-merger/293119/