The Publicis/Omnicom mega-merger: what does it mean for design?

The ‘merger of equals’ between marketing services behemoths Omnicom and Publicis will create a new network nearly twice the size of WPP and completely reshape the marketing landscape.

Publicis Omnicom

Publicis Omnicom Group – to give it its new name – says it had combined 2012 revenues of $22.7 billion (£15 billion), compared to WPP’s reported revenues of £10.4 billion.

The new group’s equity is valued at $35.1 billion (£23 billion) compared to WPP’s market value of £13 billion (calculated at the end of 2012). Market analyst Investec says the newly merged group will be ‘the number one global agency by size’.

In advertising and marketing terms the merger brings together such iconic agency names as BBDO, Saatchi & Saatchi, Leo Burnett and DDB.

And in design terms the headline names brought together in the merger include Omnicom companies Interbrand and Wolff Olins and LBi, which was acquired by Publicis last year in a deal worth £332 million.

The merger is, undoubtedly, huge, and when Omnicom chief executive John Wren describes it as ‘reshaping the industry’ it’s hard to describe it as hyperbole. Likewise media and investment analysts are routinely describing the move as a ‘mega-merger’ that will knock WPP into second place.

But will this carry through to the design sector? WPP has spent the last two decades building up an impressive portfolio of complementary design consultancies – from creative specialist The Partners to retail giant Fitch and interactive supergroup AKQA, with all points in between covered.

Will the Omnicom/Publicis merger knock WPP off its design perch?

A quick overview of the agencies in the newly merged groups suggests a good fit. Omnicom has operated brand specialists Interbrand and Wolff Olins for several years, alongside communications group Fishburn Hedges Boys Williams, which counts design group Further as one of its agencies.

Interbrand is a division of the network, FHBW operates as a group of consultancies, while Wolff Olins is a wholly owned subsidiary company. All operate globally with strong and recognisable brands.

On the Publicis side, the big name is interactive giant LBi, which is currently being merged with Digitas to form a new global group which will comprise 5700 employees in 25 countries (the move is unaffected by its parent group’s merger).

So a new group that brings together Wolff Olins, Interbrand and (soon-to-be) DigitasLBi would have coverage across disciplines, clients and sectors and seem to be well equal to WPP’s roster.

And looking at the numbers, it seems that the two groups will be reasonably equal financially as well.

For our recent Top 100 survey, accountant Kingston Smith W1 pulled the most recently filed Companies House accounts from the networked consultancies (the majority of these are from 2011).

An analysis of these shows that the newly merged Publicis and Omnicom design groups report a total turnover of £141 million, while the merged WPP groups weren’t far behind, with a combined turnover of £121 billion.

Interestingly, market analysts suggest that WPP could see a short-term improvement in business as the merged Publicis Omnicom Group is forced to jettison clients due to conflicts of interest.

No individual consultancy within the newly merged group has yet admitted to having to cut clients ties due to the merger however.

New Publicis Omnicom Group joint CEOs Maurice Lévy and John Wren
New Publicis Omnicom Group joint CEOs Maurice Lévy and John Wren

Analyst Investec also sees possible management fall-out in the new group, noting a potential clash between the US Omnicom leaders and French-based Publicis.

It adds, ‘Publicis has a good integration record in our view, but Omnicom’s is limited due to its historic organic growth emphasis.’

Publicis Omnicom Group says the new merger ‘has been structured with balanced corporate governance’ and Omnicom chief executive John Wren and Publicis CEO Maurice Lévy will lead the company as joint CEOs for the first 30 months.

After this ‘integration period’ Wren will continue as chief executive and Lévy will become non-executive chairman. The holding company will be based in the Netherlands and head offices will continue to be based in Paris and New York.

Whether the newly merged group will keep its position as the world’s largest communications group for long is a moot point. Analysts are already predicting possible future mergers – with a WPP acquisition of Interpublic mooted, as well as a possible tie-up between Havas and Vivendi.

It looks like the future for the networked consultancies will be fewer owners – and much, much bigger groups.

Financial data of WWP and Publicis Omnicom Group consultancies (most recent data from Companies House)

Financial data of WWP and Publicis Omnicom Group consultancies (from Companies House)
Agency Network Turnover (£ million)
The Brand Union WPP 17
VML London WPP 9
The Partners WPP 8
Lambie Nairn WPP 11
Addison WPP 7
Coley Porter Bell WPP 6
Fitch WPP 12
Digit WPP 2
  WPP total 121
Fishburn Hedges Boys Williams Omnicom 19
Interbrand Omnicom 14
Wolff Olins Omnicom 13
  Omnicom total 46
Lbi Publicis 78
Publicis Consultants UK Publicis 17
  Publicis total 95
  Publicis Omnicom Group total 141

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