Two of the largest ad agencies, Publicis Groupe and Omnicom, announced they will be joining forces. How will the merger of these two companies play out to combat the digital advertising powerhouse of Google? As Publicis and Omnicom merge with a combined market capitalization of $35 billion dollars versus Google’s $295 billion, it’s still going to be an uphill slug to influence a company 10x its size.
To advertisers, Google is delivered impressions, brand discovery, and the platform to measure online interactions.
Publicis Chief Executive Maurice Levy quotes “It will be able to face the exponential development of new internet giants like Facebook and Google, changing consumer behavior, the explosion of big data, as well as handle the blurring of roles of all the players in the market.”
Google alone makes up an estimated 42.6% of all digital ad revenue in 2013 with an ever gaining a foothold in mobile.
Google’s playbook move is to court advertisers for percentage of campaign media spend versus profiting on advertising technology fees. Even so, the merger’s goal of gaining $500 million in operating efficiency from organizational synergies will change Google’s margins. With over 130,000 combined total employees in the Publicis Omnicom Group, a measurable percentage of those remaining post-merger will still be directly assigned to managing advertising across Google’s properties and ad networks.
Offering advertising platforms on the billion dollar scale is not an easy task. The new holding company of the Publicis Omnicom Group will be based in the Netherlands, adding to the increasing pressure to internationalize offerings to scale, something that Google also accommodates. For startups, the best disruption is to change where consumers spend their time and then advertiser demand will follow. Yahoo’s recent acquisition of Tumblr or Facebook’s Instagram demonstrate the importance of audience before collecting data or proving the value of advertiser ROI.
Google itself is a major advertiser and a Publicis brand client for acquiring new users of Chrome and other services, giving them an inside look into how agencies operate and spend their client’s money. Google is also not afraid to experiment and try new things to compete directly with agencies for operating efficiencies. Does this conflict even matter when advertisers are forced to have a marketing strategy across internet giants such as Facebook, Twitter, Google, as well as traditional media spend with AOL and Yahoo?
If the only thing advertisers hear and see is a lead coming from Google, it’s not an omni-channel or coherent view of the world. My advice would be to start a new dedicated innovations onramp to open doors inside the mega merger agency group before their brand client’s only hear new pitches from adtech startups directly.