A David versus Goliath Battle Comes to Adland, But will Goliath Win?

Every high schooler can recite Newton’s third law of motion: “For every action there is an equal and opposite reaction.”

But it’s a rule that applies far beyond physics classrooms. In the advertising world, an attempt at an equal and opposite reaction to this past summer’s mega-merger of Omnicom Group and Publicis Groupe, now Publicis-Omnicom and the world’s largest advertising agency, is already under way.

Like the Alliance of Small Island States or any “big guy versus little guy” organization, several small to mid-sized advertising agencies including Chi & Partners, its media operation M Six, customer relationship shop Rapier, PR agency Halpern and social shop The Social Practice have begun to push back by creating their own joint holding company called The & Partnership, according to AdAge.

Headed by Chi & Partners CEO Johnny Hornby with a North American arm run by Proximity CEO Andrew Bailey (formerly of Proximity Worldwide, an Omnicom company), the new conglomerate is a recognition that small and medium-sized advertising agencies risk losing clients and being squeezed out of the market as mega mergers like Publicis-Omnicom become more common. In reaction, small agencies are fighting fire with fire. 

But are mid-sized mergers really the right solution?

Media analyst and blogger Don Cole doesn’t think so and I agree to an extent. He fears that small to mid-sized agencies won’t have the staffing, creative talent and big data resources to be truly appealing to larger (and more profitable) clients. In the end, mid-sized mergers are like pooling the skills of several minor league baseball teams. More players don’t mean more capabilities. If anything, he cautions, cost cutting (read: layoffs) will be first on their agenda. In this scenario, the Goliath that Publicis-Omnicom has become (and the others that follow) wins out over the smaller Davids.

So if mini mergers aren’t the solution, what is? It’s not as black and white as Don Coles sees it. To return to my baseball analogy, not all minor league players stay minor league forever. Some do make it to the majors. And “making it to the majors” is what all advertising and PR agencies aspire to achieve. While one route to that success is, of course, growing large (and influential) enough to be bought by a conglomerate such as Publicis-Omnicom, another way is to continuously recruit new, young talent and also become expert in specific niche communication fields. That’s what we’re doing at ThinkInk.

It’s important to remember that smaller agencies aren’t devoid of assets. At smaller shops there is often less process, less bureaucracy and less confusion over who has the authority to do what. Small agencies are nimble and can better respond to client crises, when they inevitably occur.

As for The & Partnership, you can be bet adland will be watching its success or failure as closely as it’s watching Publicis-Omnicom. The David and Goliath ad agency battle is just heating up and it’s anyone’s guess which side will win.

Will Publiomnicomis Take Over AdLand and the Media Universe?

It’s been a couple of weeks since we last posted on the ThinkInk blog, not because we’ve had nothing to say but because we’ve been crazy busy.  Summer is usually a time when a lot of businesses wind down, but it’s been the opposite around here.

New people, new clients and lots of new ideas...stay tuned for more on that but, in the meantime, we have a lot to say about last weekend’s announcement of the Omnicom-Publicis merger.

You know corporate news is serious when two things happen: the story breaks sometime between 5pm on Friday and 7am on Monday (slowing down media response and giving in-house spin doctors time to go into information-management mode) OR if said news is lampooned by comedians.

In the case of advertising agencies Omnicom Group, based in Manhattan, and Publicis Groupe SA, based in Paris, both have occurred. Last Sunday, in a lovely photo-op embrace, the agencies’ head chiefs announced the intended merger, valued at $35 billion. Meanwhile, a July 29 headline in The Onion read: “Merger of Advertising Giants Brings Together Largest Collection Of People With No Discernible Skills.”

Gibe aside, a merger of this magnitude is no laughing matter. If approved, it will have a profound impact on the advertising industry – and far beyond. Whether the fallout is “good” or “bad,” however, is up for debate.

Camp A: Spooked

On one side is the “spooked” camp, with words like “monopoly,” ”behemoth,” and “stifled competition” on the tips of its members’ tongues. Considering that the new company (will it be called Publiomnicomis?!) will have spent a combined $3.31 billion in media placements during 2012 accounting for nearly half of the world’s top 10 media agencies’ efforts, it’s more than a fair concern and one that I appreciate.

Camp B: Rosy-Eyed

Then there’s the other camp, those who see opportunity – an opportunity for smaller firms to capture new business as some disgruntled clients flee, industry pricing/digital ad value and KPI standardization, as well as increased resources to acquire, manipulate and act on big data. The latter point will help adland better compete against Silicon Valley natives like Google, Facebook, Salesforce and Adobe, among many others.

Camp C: Vanessa

My camp falls somewhere in the middle. If the proposed mega-company survives the scrutiny of both US and French regulators, the bigger question becomes “what type of precedent does Publicis Omnicom’s soon-to-be-existence establish?” Just as the airline, automobile, entertainment and pharmaceutical industries have endured mergers and acquisitions for decades, what will the advertising landscape look like in five or ten years? Will there be room for corporate and creative independence or will the specialized firms of today, like ThinkInk, be relics of a bygone era?

I really don’t know. Some 46 countries must ultimately give their blessing and the final merger may not be complete until early 2014. So there is lots of time for positing and pontification.

But don’t let your head and screen be your own echo chambers. Share your views with the ThinkInk community: do you think the advertising world will embrace this new corporate marriage or will it leave executives across the media landscape po’d and just plain scared?