The $35 million merger of the Publicis Omnicom Group in July this year, touted as the ‘merger of equals’, is easily one of the biggest mergers and acquisitions of the advertising world for a long time to come. Now, the sudden visit of Maurice Levy, Chairman & Chief Executive Officer, Publicis Groupe to India has the industry rife with speculations.
The merger was largely perceived as an attempt to dethrone and take over the No. 1 position from the ruling agency WPP. Incidentally, WPP continues to retain its numero uno position in India.
Making his views clear on the merger, Sir Martin Sorrell, CEO, WPP has called it a merger of ‘unequals’ and added that such mergers don’t work in the long-term.
The various challenges and questions raised by Sorrell include: Ambiguity of leadership, he questioned the structure of having two Co-CEOs and whether it can be maintained. Sorrell also pointed out the challenges of having a dual-management structure having two distinctly different cultures function harmoniously – the headquarters of the new CEO, and the merged entity, and ultimately the lack of clear articulation of benefits to clients and security of employees and talent.
Nevertheless, a merger of this scale undoubtedly brings benefits in terms of enhanced power of scale, which is a precious tool in the media business today. If the newly-formed Publicis Omnicom Group were to use this power for negotiation in consolidated buying, it is bound to impact other networks as well.
However, industry insiders maintain that the perceived benefit of the Publicis-Omnicom merger is only in media, wherein execution is easier said than done. Theoretically, media buying should become a strength, but in reality, it is a challenge for both the entities as it involves client conflict.
“Consolidation is easier said than done; the ground reality is different. Logically, my sense is that they will bring the media buying together, but there will be a conflict of clients, it is not easy to bring two disparate companies together. Also, how the media owners accept it is another aspect. This depends on the previous relationships of the individual companies as well. Cross synergies and getting better rates and volumes are some of the facets that will be looked at,” opined Ashish Bhasin, Chairman India and CEO South East Asia, Aegis Media in an earlier conversation with exchange4media.
Meanwhile, Levy’s visit to India has also given rise to the rumours regarding the sale of Madison World. Madison World has completed 25 years in 2013 and remains the largest independent media company in the country. The agency is estimated to have gross billings of Rs 3,000 crore. In the past, Sam Balsara, Chairman and Managing Director, Madison World has affirmed that the agency is not ready for a sell-out, but open to collaboration.
“The impact of the merger on the media industry scenario in India is not going to be very high. It is not going to alter the media scenario in India. WPP will still be number one and far ahead. The world today is getting obsessed with being number one and this merger is nothing besides the desire to be number one,” remarked Balsara in an earlier conversation with exchange4media. He, however, declined to comment on the subject of Levy’s visit to India.
While Madison World has various entities across communication verticals, Madison Media is the star offer of the company. If Madison were to ‘collaborate’ with Publicis Omnicom Group, it would take the former’s media clout and buying strength to a whole new level and scale.
Levy’s India visit is also fanning rumours of new digital acquisitions as well as Law & Kenneth joining hands with Saatchi & Saatchi and coming under the big joint Publicis-Omnicom family. Though this coming together of the two agencies has been speculated upon for the past few months, there has been no formal announcement on the same.