Google's All "Who Cares?"
Omnipotent, or Omnishambles?
The Economist
This week’s merger announcement between Omnicom and Publicis, two ad and marketing agencies with a combined 2012 revenue of $23 billion, involved glasses of champagne. But perhaps a jug of water would have been the more appropriate thirst-quencher for these industry giants’ long road ahead, even as the biggest agency in the world. This commentary from The Economist is both a primer for those who haven’t been keeping up with the news and a witty analysis for those paying attention to only a particular segment of the story. The bottom line, of course, is that the companies merged in an attempt to solve a couple of major problems: the growth of digital advertising that bypasses agencies’ traditional role in placing content and, secondarily, an ongoing succession conundrum at Publicis (Maurice Lévy, who heads the company, is 71). The new agency also promises to cut $500 million in costs, and because it will represent 20% of ad spending and 40% of some publishers’ ad slots, it could be in a great position to help clients get better rates. But there may be more bad news than good. Aside from the whole “We have to get this approved by antitrust authorities in more than 40 countries” issue, the stumbling blocks could include client dissatisfaction (several competing brands are now being represented under the same mammoth umbrella); cross-cultural differences; and the challenge of catching up to the nimble Google, which controls a third of all online ad spending. Perhaps, the article argues, the change is akin to what happened on the Wall Street trading floor when everything became automated: “The move toward buying ads on exchanges will mean that their margins are squeezed and life gets a lot tougher.” Cheers?