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Omnicom-Publicis merger: All about scale

The impact of the merger of the world's second and third largest advertising networks (Publicis Groupe and Omnicom Group) on India may be a good 14-16 months away. However, ad gurus expect substantial action in media buying and media planning once the integration takes place.

Maurice Levy, left, Chief Executive of French advertising group Publicis, and John Wren, head of Omnicom Group pose during a joint news conference in Paris on July 28, 2013 (Photo: AP) Maurice Levy, left, Chief Executive of French advertising group Publicis, and John Wren, head of Omnicom Group pose during a joint news conference in Paris on July 28, 2013 (Photo: AP)
Ajita Shashidhar
Ajita Shashidhar
The impact of the merger of the world's second and third largest advertising networks (Publicis Groupe and Omnicom Group) on India may be a good 14-16 months away. However, ad gurus expect substantial action in media buying and media planning once the integration takes place.

Today, the WPP-owned Group M commands a 42 per cent market share, while IPG Mediabrands is a distant second with an 18 per cent share. Publicis Groupe's media arm, Vivaki, which consists of Starcom Mediavest, Zenith Optimedia and Digitas, is the third largest media network in India with a market share of eight to ten per cent. Omnicom, with OMD (Optimum Media Direction) and PHD, is smaller than Vivaki. "The coming together of all these agencies … would get them critical mass and scale, and their power to negotiate would increase manifold," says the head of a leading media network.

While Group M will continue to be a strong market leader, the fight will be for the second spot. Though Omnicom's media agency, OMD, headed by Jasmin Sohrabji, may be a small fish in terms of scale, it is recognised for the quality of its work. On the other hand, the media agencies of Publicis, despite being bigger, have not been doing too well. "It all depends on who heads the merged entity. If Jasmin heads it, they will surely give us credible competition," says the head of this Mumbai-based media network. Unlike Group M and IPG Mediabrands, which are conglomerations of media agencies headed by one person, most Publicis and Omnicom agencies function as separate entities across the globe.

Not a lot of action is expected on the creative side. "It would be restricted to back-end efficiencies and sharing of global best practices," says the head of a leading creative agency. The merger would bring together creative agencies such as Leo Burnett, Publicis, Saatchi & Saatchi, BBH (all Publicis agencies), DDB Mudra, BBDO and BBH (which are Omnicom agencies).

With this merger, the Publicis Omnicom Group in revenue terms would be a $23-billion giant. Arch rival WPP is a $16-billion company. The merged entity has a market cap of $35 billion.