Silicon Valleywood

Huge ad merger’s scale argument doesn’t hold up July 29, 2013

Two of the biggest advertising holding companies, Omnicom and Publicis, would combine to make the biggest mega-agency ever. But is that a good thing? I’m skeptical.

As Om points out, all companies have to be tech companies these days, and advertising powers the business of two of the most important forces in tech, Google and Facebook. Even mainstream media thinks the merger is a big data play. Big tech players like Oracle, Salesforce, and Adobe are bulking up on marketing and advertising technologies through acquisition, and maybe we are heading for a showdown between advertising “art and science.”

I’m not going to dwell on how hard it is to pull off mergers of equals, or that client overlap and conflict will open up competition from other agencies. But think of what ad agencies do for their clients. They’re creative consultancies who buy media efficiently in order to reach specific audiences.

I’m hard-pressed to see how getting bigger is going to make the combo more creative. Nor will sheer mass help it respond to one of the key opportunities in marketing: i.e., figuring out how to really use social media for something other than cheap inventory.

The combo may have more buying heft when negotiating media buys – but that’s in television. With the proliferation of ad networks and analytics, buying specific digital audiences is a pretty level playing field, if not a commoditized skill. In theory, the merged company could look at the data from all of its campaigns, digital and traditional, to better understand buying patterns and audience interest, and properly asses the impact of branding campaigns on purchases. That would be huge.

But do you really think a massive organization with all of its fiefdoms and differing “religions” on market analysis – let alone different platforms and tools – is going to pull that off?