America's Omnicom, the world's second-biggest advertising agency, is merging with its French counterpart Publicis, the third-largest. Publicis Omnicom will leapfrog Britain's WPP to become the top advertising group with joint sales of $22bn (32% of the industry's global total) and a combined market capitalisation of $35bn. CEOs Maurice Levy of Publicis and John Wren of Omnicom will jointly run the new group.
What the commentators said
Assuming it goes through, the deal "is easily worth the effort", said John Jannarone in The Wall Street Journal. Thanks to overlap in areas ranging from IT platforms to research, annual savings of $500m should be no problem. The longer-term rationale, meanwhile, is to establish a bigger footprint in the world of internet advertising, especially mobile.
Today, marketers spend $117bn, a fifth of the total worldwide advertising market, on digital advertising, said Emily Steel in the FT. Digital spending is expected to grow by 23% this year, compared to the overall market's 3%. Firms such as Google are offering new ways for marketers to reach consumers, and technology is mining data to target advertisements more effectively: ie, a dog food marketer would aim to show advertisements only to people with pets.
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The tie-up could well help "this behemoth bulldoze into lots of exciting growth markets", said James Moore in The Independent. But this assumes that two CEOs with big salaries and egos can make a success of their double act a rarity in business history.
