Merger shouldn’t affect business, vendors speculate

Sunday’s announcement about New York-based Omnicom and Paris-headquartered Publicis Groupe intention to create the world’s largest advertising firm had the global adworld reeling, and quick to respond with many positive, skeptical and probing takes on the seismic news. 

Chicago’s ad/production community is also voicing its thoughts on how the pending gigantic, $35 billion holding company will/won’t affect them. 

Chicago is, after all, North America’s second largest advertising market, estimated at $18-$20 billion, and is home to more than half of the agencies on the merged roster regularly doing business with the estimated 450 vendors that service their production/post/digital requirements.

Overall, vendors don’t see the merger impacting their businesses one way or another.  Explains STORY executive producer Mark Androw, “Within Omnicom we have worked with their agencies GSD &M, Martin Williams, Zimmerman, DDB, Rodgers Townsend and BBDO and each agency operates very differently and autonomously.

“Even within the different city offices of BBDO and DDB, they operate very independently.  They often use different contracts and each has its own culture and style.   The same is true of our client with Publicis, Burnett, Saatchi and Burrell, so our dealings with them should have no ramifications on us as a vendor,” Androw said by phone from a location in Northern Italy.

Historically mergers don’t alter agencies

Dictionary Films’ executive producer Chris Rossiter, also does not anticipate a lot of change on the production side, speaking  from a position of internal knowledge from 23 years of production experience at Leo Burnett.

“When Publicis absorbed Burnett and became sister agencies, Burnett didn’t change its approach to creative work.  I never noticed any change in the agency’s desire to do great work for a client. 

“A constant source of challenge is not coming up with the creative idea – but how to deliver it.”  As such, Rossiter foresees one thing the merged agencies will be looking for is “a bigger digital stamp.”

What the merger will allow is a change to share efficiencies, which allows strategic and creative chops to flourish.  “The most telling thing, however, is how clients will react to the move.  I have no idea about that.  Clients will determine how big is too big.”

“I’m looking at Leo Burnett world headquarters, so how much bigger can it get,” said Mindy Verson, partner in Audio Producers Group, which counts Burnett as a client. “I hope the merger means good things for my agency friends and no layoffs. If it’s more unified maybe that will inspire new clients to bring their business to Chicago.”

Budgets, conflicts, administrative costs questioned

Optimus president Tom Duff also doesn’t see the merger as having a major effect on the production-post business. What does concern him, however, is, “The payment terms dictated by the big agencies are already tough and could get tougher.”

Director David Deahl of Big Deahl, who works with agencies internationally, brought up the question, “How are these two giant conglomerates, working as one entity, going to be able handle client conflicts?”

Conflicts will definitely be something everyone will be watching. “How will that be handled, will the brands in conflict with each other look for another agency?” asks CRC’s executive producer Rose Razal. 

“I’m assuming the holding companies did their due diligence and talked with their clients before moving ahead with the merger.  We’ll find out in the next quarter when the merger is finalized.” 

Cutters’ Tim McGuire addressed the financial aspects of the merger.  “These are two incredibly strong organizations and they’ve been able to avoid client conflicts in the past,” he said, adding, “There seem to be a lot of administrative savings as a result of this,” he said.

Administrative savings are one of those benefits that will reveal itself as we learn the details about how the merger comes together, noted Mark Egmon, The Team Companies VP/marketing communications and brand management. 

“The success of this lies in the strength and abilities of top management of both holding companies to pull this together. This is a time-will-tell situation, a test of the mettle of the leadership in something this big.”

In summary of the world-shaking news, “This is the first chapter in an interesting global corporate story,” he said.

COMMENTS