Warc Blog

Publicis Omnicom: An effectiveness 'heavyweight'

30 July 2013
PARIS: The merger of Publicis and Omnicom would create a dominant force in the world's effectiveness competitions, judging by analysis of this year's Effie Effectiveness Index.

The Index (www.effieindex.com), which is produced by Effie Worldwide and Warc, tracks performance by agency networks and their holding companies in Effie competitions around the world. It awards points for finalist and winning entries in these competitions.

The 2013 Index, released in June, showed WPP as the 'most effective holding group', with 669 Effie awards or finalists and a points total of 2539.

Omnicom and Publicis came in second and third, respectively. A combined Publicis and Omnicom, however, would have dwarfed WPP with 1037 Effie awards and finalists, and a points total of 3929.

The merged company would have led the field in every geographic region. Omnicom was already the Index's leading holding group in North America and Latin America. In Asia-Pacific, Europe, and Middle East/Africa, WPP topped the 2013 rankings.

In terms of individual networks, Omnicom houses four of the global top 10 in the 2013 rankings: BBDO Worldwide (which was second only to WPP's Ogilvy & Mather); DDB Worldwide, OMD and TBWA Worldwide. Publicis is home to just two of the top 10: Leo Burnett Worldwide and Publicis Worldwide.

One of the major questions around the deal will be unpicking potential client conflicts. Omnicom's high-scoring work in the 2013 Effie Index rankings includes campaigns for PepsiCo, McDonald's, Johnson & Johnson and Volkswagen. Publicis agencies have scored highly with campaigns for both PepsiCo and Coca-Cola, as well as Procter & Gamble and Toyota.

The proposed deal, announced on Sunday, was presented as a merger of equals which, if approved, would give the combined entity the required scale and investment to deal with major changes in the advertising and media landscape. The deal is expected to release $500 million in cost savings - though exactly how those would be made remains unclear.

Omnicom chief executive John Wren, who will become co-CEO of the new group, told the Financial Times that "lines have blurred completely", with new competitors coming in every day. He added that the pace of change is going to get faster.

Predicting that the merger would create more powerful solutions for clients, Wren explained that both groups have experience of ad-buying and technology partnerships with digital giants such as Google. Publicis's strategy in recent years has been to buy digital agencies, including LBi and Razorfish, whereas Omnicom has focused on growing organically in this area.

Martin Sorrell, chief executive of WPP, described the move as "extremely bold, brave and surprising" and predicted that further consolidation of the industry is inevitable. Speculation has already begun as to whether WPP will seek a similar mega-deal with one of the remaining smaller holding companies to make up ground. But several industry insiders remain sceptical.

David Jones, chief executive of Havas, said clients want agencies to be more "agile" and "not bigger and more bureaucratic and more complex", while Bert Foer, head of American Antitrust Institute, predicted that clients of the two companies would object to the deal.

Another major question will be whether the combined organisation will be able to use its scale to deliver greater savings for clients in media buying.

Dominic Proctor, global president of GroupM, WPP's media investment unit, told Campaign that getting scale in media investment is critical for clients. But he argued that both Publicis and Omnicom had so far struggled to join up their existing media-trading operations, adding: "It only works if it all joins up."

Data sourced from multiple sources; additional content by Warc staff

 
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