WPP India remains muscular even after Publicis-Omnicom merger!
The $ 35 billion merger between the Publicis Groupe and Omnicom Inc has created a new advertising giant relegating WPP group, hitherto numero uno in terms of revenues to the second spot. It is being estimated that the merged entity will be the biggest advertising company in the world ahead of the current player, WPP Plc. That size and geographic reach would give it more power to negotiate better ad rates for media placements on television, the Internet and in print for its clients. A deal could also act as a hedge against the possibility of losing clients since each holding company owns dozens of ad agencies. It may contribute to a reduced degree of competition when services are priced for clients.
Both Omnicom and Publicis have created networks of agencies and public-relations firms within the larger company. These networks are designed to work independently from one another so that competing companies are placed in separate networks. Omnicom’s networks include BBDO Worldwide, TBWA Worldwide and DDB Worldwide Communications Group. Publicis owns networks Publicis Worldwide, Leo Burnett Worldwide and DigitasLBi.
In India the merged entity will own Publicis India, Publicis Capital, Publicis Ambience, Saatchi & Saatchi, Leo Burnett, BBH India, StarcomMediaVest, Zenith Optimedia, Vivaki, TBWA, RK Swamy BBDO, DDB Mudra, BBDO India, Mudra Max, OMD and Proximity.
So how does the combined entity rank against WPP in terms of revenues? Although there are no revenue and profits information as these companies are not listed (nor their subsidiaries) in India, various advertising experts Adgully spoke too enabled us to arrive at a range.
WPP group with agencies like Group M, JWT, O & M, Grey and TAM Media is having a revenues in the range of Rs 1425 crores to Rs 1575 crores; the merged Publicis-Omnicom group with agencies like Leo Burnet, BBH Media, Publicis India, StarcomMediaVest and Mudra may rank second at between Rs 550 crores to Rs 650 crores. IPG with revenues of Rs 500 to Rs 600 crores will rank third. It has agencies Lowe, Lintas and Draft FCB. IPG is currently ranked number two will move on to the third spot in the new ranking order.
However all this is still a long way off and just an estimate at the moment. The merger has to go through the capital market and regularity compliance issues in their respective geographies, which sources feel will not be smooth. Besides the global advertising agencies operate on an umbrella holding structure pattern whereby the agencies under their fold operate more like independent entities.
There are also a lot of other questions – that of smooth integration of employees and the work cultures but that too will follow later as the respective agency heads will continue to manage their agencies for the first 30 months. Another issue is protecting employees jobs and at the same time removing duplication of job function & services and thereby achieving cost savings. All that will remains to be seen.
The advertising world has witnessed a spate of acquisitions in the past couple of years globally; the pattern albeit on a smaller scale has followed in India too. Consolidation is the name of the game. In 2012, Japanese Dentsu acquired UK’s Aegis in a $ 4.90 bn buyout. This would have given Dentsu markets outside Japan.