360° Coverage : Publicis & Omnicom...The Real Mad Men

2 Updates

Publicis & Omnicom...The Real Mad Men

May 9 2014, 11:00am CDT | by

If a week is long time in politics then 10 months must be an eternity in business…especially a business where the principal objective is to shine a light on commercial activity. Go back to a balmy...

Filed under: news

 
 
 

16 weeks ago

Publicis & Omnicom...The Real Mad Men

May 9 2014, 11:00am CDT | by

If a week is long time in politics then 10 months must be an eternity in business…especially a business where the principal objective is to shine a light on commercial activity.

Go back to a balmy summer evening in Paris, on Sunday, July 28th 2013 Maurice Levy, the head of French advertising firm Publicis and Omnicom’s Chief Executive Officer (CEO), John Wren, signed a deal that was aimed at creating the biggest advertising company on the planet.

Before the planned merger the leading European and American advertising agencies by market cap were:

#1: WPP Plc (UK)                                     USD28.756Bn

#2: Publicis SA (France)                      USD17.751Bn

#3: Omnicom Group Inc. (USA)       USD17.245Bn

#4: Interpublic Group Inc. (USA)   USD  7.392Bn

Had the merger proceeded, the new company would have commanded a market cap value of USD35Bn, some 21.7% larger than WPP Plc.

Broken Dreams; Conflicts of Interest:

Sadly, dreams of this nature can often become nightmares and unravel before they are fulfilled. It was announced today (May 9th 2014) that Publicis and Omnicom, had decided to scrap their planned merger.

It was said that the merger was abandoned owing to challenges that “…remained to be overcome…” Indeed the glacial pace of progressing toward a resolution had been creating a high level of uncertainty for the two agencies and their clients.

If the merger had progressed, then many, once active, independent agencies would have been struggling for space under the collective umbrella. It is hard to fathom how the creative talents and temperaments of Saatchi & Saatchi, BBDO, Leo Burnett, BBH, Interbrand, ZenithOptimedia, OMD and StarcomMediaVest could have functioned effectively and efficiently under one roof.

It appears to be an irrelevance that the potential Publicis Omnicom Group assured clients the new group represented  a “..merger of equals…” that would have delivered synergistic benefits from    “…the most comprehensive offering of analogue and digital services…”.

Advertising is clearly an industry where the client’s needs are supreme and one look at the duplication of industrial sector leaders that would have been on the combined client list indicated how serious the issue of a conflict of interest could be  no matter what scale advantages were on offer. The roll call of client billings included:

Coca-Cola and Pepsi, McDonald’s and Yum Brands, Google and Microsoft, Procter & Gamble and L’Oreal and Mars and Nestle.  Just from watching the latest issues in Mad Men where two offices of a single firm cannot agree  one can begin to appreciate how the Goliath  may have found itself having to pitch again to retain existing business.

However, can the combination of two such powerful firms really be seen as equal? One could point to the fact that Publicis’ Maurice Levy and Omnicom’s John Wren had proposed that they would serve as co-CEOs for the first two years of the companies coming together. After then it was suggested that Maurice Levy would have become Non-Executive Chairman. However, one cannot help but speculate that that would have been one Non-Exec role that had to allow for some fairly active hands on influence. Surely a course that would have profusely irritated the CEO! It cannot be overlooked that the legal costs were mounting on both sides and there is talk of strained disagreement as to who would be the highly influential Chief Financial Officer.

Could this “Spruce- Goose” have flown?/>/>

We will never know how the super ad agency would have fared. Would the competing clients have been assured as to the insulation quality of the creative melting pot?  Probably not, there would have been some losses …but it is likely that they could have been tempered by other account wins. As the dust has settled today it is clear that both parties are trying to sing from the same hymn sheet as they blame the merger collapse on “…difficulties in completing the transaction within a reasonable timeframe…”.

In theory one could point to the efficiency of scale that could have been achieved in areas such as technology and media buying … but once again the issue of prime slots being given to one client over another could have led to both internal and external friction and an eventual loss of shareholder value.

Publicis and Omnicom have said that looking ahead they will have to accept that they are competitors…yes, I see that when it comes to chasing clients and improved billings… probably also in future when they separately chase new, but smaller acquisition targets as they try and close in on the still, unchallenged number one, WPP Plc…with that in mind it will probably be a superb weekend for Sir Martin Sorrell.

Stephen Pope – MarketMind

 
Update
2

2 days ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of 20,0 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

3 days ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and MH17" ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Japan to aid connectivity upgrade in northeast India
Tokyo, Sep 1 (IANS) India and Japan Monday decided to strengthen cooperation for improving connectivity and socio-economic development in northeastern states of India.
 
 
Three Ebola cases recorded in Nigeria oil hub
Abuja, Sep 1 (IANS) At least three cases of Ebola virus disease (EVD) have been recorded in Nigeria's oil hub of Port Harcourt, where a fatality was confirmed last week, the country's Minister of Health Onyebuchi Chukwu said here Monday.
 
 
India, Japan to elevate strategic partnership
Tokyo, Sep 1 (IANS) Prime Minister Narendra Modi Monday said relations with Japan were of the "highest priority" for his government and announced a slew of initiatives, including turning the strategic partnership into a "special" partnership and a fast-track channel for Japanese investors.
 
 
Indian in UAE unable to pay hospital bills
Abu Dhabi, Sep 1 (IANS) An uninsured Indian man in the UAE has run up more than $160,000 in medical bills after he suffered a brain haemorrhage and spent about six months in an Abu Dhabi hospital, a media report said.
 
 
 

Latest from the Network

'Ukrainian conflict has escalated into war'
Kiev, Sep 1 (IANS) Ukrainian Defence Minister Valeriy Geletey Monday said the conflict in eastern Ukraine between government troops and pro-independence insurgents has escalated into a "war". "A great war came at our...
Read more on Politics Balla
 
IS slogan found on school walls in Saudi Arabia
Riyadh, Sep 1 (IANS) Slogans praising Sunni militant group Islamic State (IS) were found on the walls of some schools in the Saudi Arabia capital following Saudi King Abdullah bin Abdulaziz's call for coordinated...
Read more on Politics Balla
 
Japan to aid connectivity upgrade in northeast India
Tokyo, Sep 1 (IANS) India and Japan Monday decided to strengthen cooperation for improving connectivity and socio-economic development in northeastern states of India. According to an Indian government release issued...
Read more on Politics Balla
 
Words cannot describe Abe's hospitality, says Modi
Tokyo, Sep 1 (IANS) Prime Minister Narendra Modi Monday said he could not describe in words the hospitality he received in Japan, saying it was an indication of Japanese Prime Minister Shinzo Abe's special affection...
Read more on Politics Balla
 
PTI president says political crisis in Pakistan scripted (Roundup)
Islamabad, Sep 1 (IANS) In a clear sign of a revolt brewing within, Pakistan Tehreek-e-Insaf (PTI) president Javed Hashmi Monday claimed that the ongoing political crisis in the country was scripted amidst more clashes...
Read more on Politics Balla
 
Three Ebola cases recorded in Nigeria oil hub
Abuja, Sep 1 (IANS) At least three cases of Ebola virus disease (EVD) have been recorded in Nigeria's oil hub of Port Harcourt, where a fatality was confirmed last week, the country's Minister of Health Onyebuchi...
Read more on Business Balla
 
Blake Shelton and Miranda Lambert reject $1m Vegas offer
Blake Shelton and Miranda Lambert rejected a $1 million deal to perform three shows in Las Vegas. The country couple turned down the offer and tried to negotiate a $1.25 million deal, meaning they would earn $416,000...
Read more on Celebrity Balla
 
Adam Levine splashes out $4.55m on new home
Adam Levine and his wife Behati Prinsloo are set to splash out $4.55 million on their first apartment together. The Maroon 5 frontman and the Victoria's Secret Angel - who tied the knot in July - are said to be in...
Read more on Celebrity Balla
 
Seth Rogen says stolen celebrity photos shouldn't be posted
Seth Rogen has urged people not to post the naked photos stolen from Jennifer Lawrence's phone. The 'Knocked Up' star is disgusted by the leak of explicit images of the Oscar-winning actress and is adamant that what has...
Read more on Celebrity Balla
 
Miley Cyrus: Elvis was the original twerker
Miley Cyrus has claimed Elvis Presley was the original twerker. The 'We Can't Stop' singer has attracted much attention and criticism for her penchant to perform the butt-shaking dance on stage in various flesh-flashing...
Read more on Celebrity Balla