Publicis & Omnicom

Publicis & Omnicom

$23B in revenue;  130K employees – that’s the anticipated top line numbers on the proposed Publicis and Omnicom merger.  Compare it to WPP at $16.5B in revenue.  And the rest of the players, at 50% less in revenue to WPP.

The combined company gives Publicis/Omnicom a gigantic footprint in every area core area:  creative, media buying/planning, digital, events, direct response, ecommerce, web management, etc.

And we can prognosticate all day about the merger, whether Publicis/Omnicom can keep focused, not erode their customer base, get the estimated $500M in savings out of the combination. 

But what intrigues me is what happens to the rest of the players.  

1. A WPP/Interpublic merger would put WPP back on top in terms of revenue by a $1B or so.  However, it would shift the possible merger revenue back to the US.  WPP has consistently said, and frankly done a great job, moving revenue overseas, thus going to higher growth markets.  Chances of a merger between the two giants – 40% Interpublic is large, but it has been well documented the agency holding company has had…is that too much of a distraction for the laser focused Sir Martin Sorrell?  China is the big bet… who owns the market and more importantly who can drive additional revenue share in the country.  My gut, WPP wins… WPP has had a longer time to focus and invest in China.

2. Japan – Dentsu and Hakuhodo continue to have a lock on the country.  They won’t necessarily gain revenue, but they won’t lose it either.  The bigger question is whether Hakuhodo is able to drive a wedge between the big players and Dentsu on any internal client competitive issues.

3. Wildcard – WPP’s international focus could make Dentsu a very interesting combination.  Owning Dentsu completely locks all media inventory with Dentsu and provides a WPP/Dentsu merger with the ability to gain media revenue every time Publicis/Omnicom purchases media in Japan.  Leveraging Dentsu’s model in China and across Asia Pacific could allow WPP to gain big market share in Asia.  It also fills the appetite clients have to continue to drive business in Asia.

This one is a power struggle in my view.  Dentsu is a very, very private agency and sharing information isn’t a strong point of the agency.  Then there are the diverse cultural differences with the Japanese.  But, if anyone can pull off a large international deal in Japan its Sir Martin.

4. Rest of the Bunch – given scale, the rest will need to settle with their place at the table, prove they can provide better creative, service and prices and fight for the scraps.  But let me say this…. You can make a ton of money picking up the “scraps” from the big dogs.

Scott