The potential merger of Omnicom and Interpublic is going to make for a very interesting 2025 as the industry watches the impact play out, assuming the deal is approved in the second half of next year. It appears the new mega-agency, OMC, will eclipse every other network, however the merger is also expected to create opportunities for independants, according to industry sources.
Andrea Hunt, president and CEO of the Association of Canadian Advertisers (ASA) says the association supports competition and choice, and while it’s true there may be one less global holding company, until further announcements are made, the industry will need to assume current agency options remain unchanged.
“While the announcement has cited clear benefits for affected agencies, greater clarity on what this means for advertisers will be required,” says Hunt. “The new entity is expected to promote the benefits of even greater scale and capabilities while smaller independents are likely to cite the benefits of their relatively smaller size. For both, understanding the specifics of how it will impact individual businesses will be critical.”
Historically, when there have been large agency mergers, independent firms and new boutiques have benefited. Not all clients will want to be part of a behemoth. Some will prefer to review their business and receive more personal service with a smaller agency.
“It is worth noting, scale is not universally positive or sufficient,” adds Hunt. “For example, in the case of media buying, it is not enough to speak to efficiency, you also need to consider effectiveness. Media savings can be, on the surface, substantive, but innovation and creativity are also critical for growth.”
Robert Jenkyn, president of independent Horizon Media Canada, agrees that there will be opportunities for independent shops and that the merged agencies may struggle to differentiate themselves – and the clients they work with.
“I think there might be some issues around conflicts,” he adds. “There are efficiencies to be had, whether it’s with buying or data, but at what point do clients have separation, at what point are they conflict-free? If you have the same buying teams working on similar brands and similar categories and there’s a similar process or a similar data set, how are clients differentiated? I think that differentiation piece is an opportunity for the independent agency.”
He adds, “I do think it’s strange that, as media fragments, buying is consolidating.”
Scott Stewart, general manager of Glassroom, says this merger clearly demonstrates how commoditized the industry has become. “For two of the world’s largest holding companies to come together so easily, it suggests that there is significant lack of differentiation between service offerings at the global holding company level and for creatively ambitious brands, a good time to reflect on the level of services and strategy that they are receiving from their current media agency.
“Comparatively, I do think that independents are well positioned and can offer a more customized approach for those clients who want a deeper, more personalized service offering, and one that is tailored around the needs of their business rather than a streamlined approach to process and product.”
Stewart adds that In terms of improved buying advantage, while volume is important, the industry is past the tipping point of media cost as the priority metric of success and that media effectiveness far outweighs media efficiency as the top business priority.
Omnicom offers a range of services to more than 5,000 clients in 70-plus countries. It is comprised of networks BBDO, DDB, TBWA, as well as agencies Goodby, Silverstein & Partners, GSD&M, Merkley+Partners and Zimmerman. Its media group, meanwhile, includes agencies Hearts & Science, OMD and PHD.
IPG global brands include Acxiom, Craft, FCB, FutureBrand, Golin, Initiative, IPG Health, IPG Mediabrands, Jack Morton, Kinesso, Magna, McCann, Mediahub, Momentum, MRM, MullenLowe, Octagon, UM, Weber Shandwick and others.
