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Big news in the advertising world. Omnicom and Publicis merged. Great for shareholders. Great for the executives in place. Bad for the industry in the short term. Great for the industry in the long term. As you read through the myriad of press from OmniPub about how great it is for their clients (ask Coke and Pepsi how they feel today) and from competitors about how it's great for them (Coke, Pepsi...how you doin'?), below are some insider thoughts on what will truly manifest and how this merger means the ad world will never be the same.
And this is only big news until WPP makes a decision on who they want to gobble up. Don't buy Sorrell's comments about OmniPub being too big. WPP is not a small organization and there is no way WPP will be comfortable being #2 for too long.
1. Fewer big ideas, more sh...err, sheets
No matter how executives like to paint it, creativity suffers in bureaucracy. Talented minds that clients hope are identifying consumer trends, planning media strategies, and curating game-changing creative ideas will now see more of their time tied to operations. Timesheets, spreadsheets, expense sheets, and emails from back-office (the new version of the memo (sheet)) to satisfy the hordes of back-office personnel, compliance drivers, and such. More time on "integration calls" with agencies you called your mortal enemy yesterday. Everybody thinking about both their professional survival in the new world and how they can get ahead in the new organization. This will drive the best minds to think of their time in the office as just a job. Not a 2013 reincarnation of Mad Men. Ideation for the client suffers. Client loses.
2. You're working with whom?
More consolidation means more client conflict (competitive brands within the same agency portfolio). Agencies have been promoting the "we promise to keep these teams separate" mantra for years, but for those in the know…this is just smoke and mirrors. Different city becomes different building. Different building becomes different floor. Different floor becomes other side of the restroom. As the primary customer is the shareholder, agencies will transfer personnel, consolidate offices and tie competitive clients to the same back-office infrastructure. This may not necessarily mean client attrition, but it will mean that agencies will be weaned off of a client's true competitive differentiators (product development, research, and meetings with key decision makers) for fear of leakage. Welcome to world of simply managing the mechanics of advertising…not in building the concept car. Talented agency minds have less opportunities to be great. Client suffers.
3. The talent has left the building
The large agencies are now operated by back-office mentality (short-term profit, cost, margin, and other business metrics) that the talented client service folks must manage to. Great agencies realize that great work creates great business results that are sustainable. Great business results without great work behind them will only last for a period of time. You can buy time through consolidation, cost management, and efforts to squeeze out additional pennies on the dollar (trading desks). The great agency folks now have more mandates not benefitting their client (benefitting shareholders) and less control of where the media dollars go. The great agency folks also move farther from the money (equity, profit sharing, etc.) the larger the organization gets. Talented agency minds leave. The client suffers.
4. Our agency totally builds our own tech!
Great tech does not live with agencies. Why? Agencies love to build technology (version 1). They absolutely hate to maintain and iterate (version 2 and beyond). That's where the "less fun" costs start to multiply (more product folks, more QA folks, more support). Trading desks seem like the anomaly until you realize how many of these are simply white labeled versions of Turn or Invite. Also, the bigger the organization, the harder it becomes to build something meaningful for somebody as opposed to something mediocre for everybody. As scale continues and specialized technology can touch a higher percent of revenue, agency value (in the holding company sense) decreases by not iterating. Talented agency minds have less money for developing tech to differentiate. Talent leaves for technology to do things right. Clients win actually?
5. We totally have that service offering!
The holding companies are notorious for starting "new agencies" to solve market demands. You need content development? We have that. Well, we actually just created it to sound like we have it, even though there is only revenue and a team driven by the first and only client using it (probably a new company that was pitched versus an existing client). All of this is just an attempt to appear agile and current…when the reality is anything but. Every year, a holding company launches a few small "startup agencies" to capitalize on what's hot in digital. The next year at the agency conference you ask, "hey where's startup agency XYZ?" The answer, "that was so yesterday so today it's agency ZYX". Clients get great slide decks but no substance. Clients lose.
So, what happens?
The culmination of points 1-5 will lead to a renaissance of new agencies, consulting houses, and technology providers. Full disclosure, I work for an independent media agency, that actually operates and breathes like a consulting shop. However, what I envision is actually something different to complement the existing independents. The talent will exodus the holding companies and will start highly specialized and highly compelling agencies, consulting houses, and specialized technology companies with the executives actually participating in the client work (strange concept, no?). This latter point is huge. If those making decisions for the firm are actually servicing clients...better decisions are actually made (and the culture thrives). The talent will love the lack of bureaucracy and increased productivity and creativity. The clients that liked the talent will find strong investment opportunities in funding these entities and will also evaluate taking more marketing activities in-house. Creativity increases. Productivity increases. Innovation renaissance. Client wins.
Or I might be wrong and we'll think about Mad Men the way we think about fair play in Washington D.C. and clean air. It was nice…but it's gone.
In the meantime, it's good to see folks in our industry don't take themselves too seriously. Can we all just giggle that both @OmnicomPublicis and @PublicisOmnicom were both available for a competitor to grab? Yup. Nimble.