Struggling to see the upside of the POG merger? Me too.
Bob Wootton is not short of an opinion or two, and having spent 15 years lobbying and representing advertisers for ISBA and, before that, 20 years media buying for leading London agencies, where better to start his monthly column than the biggest media merger in history…
For some time I have been suggesting that the industry’s next big competition battle will not be around a media owner consolidation, but an agency. It still came as a shock, though, when the Omnicom-Publicis mega merger hit the news, surely the biggest headline to hit the industry for some time, perhaps ever. Its impact all the greater from its suddenness when compared with that of WPP whose empire was built more gradually.
Tellingly, almost all the public reaction – a lot of it good, common sense, I might add – has been from independent commentators, be they non-aligned agencies or journalists, while the industry’s leading lights noticeably taciturn even now, over two months since the news broke. Why?
Well, it’s pretty obvious. The merger is so ‘mega’ that it impacts almost everybody. The industry bodies that represent advertisers (ISBA), agencies (IPA) and the whole industry (AA) are all, to some greater or lesser extent, conflicted.
The industry’s leading lights are noticeably taciturn. Why?”
Unsurprisingly, ISBA, alongside many other parties, has been canvassing the views of its members and discussing the related issues iteratively with them and it is already clear that there may not be consensus among advertisers. Indeed, on the weekend of the merger announcement back in July, independent consultancy IDComms published an excellent piece suggesting that the top 20 global advertisers should expect some imminent and serious POG luuurve, but that the rest should take a cold, hard look at the implications for them.
Agencies too, are divided. You might expect competing agencies to fear and rail against the creation of such a massive competitor. But think again. If WPP is to regain its top spot, it doesn’t want to make a competition referral which might scupper POG but also its own onward growth path too.
And if WPP does fight back as declared, one hell of an acquisition spree and a resounding kerching could be on the cards for the remainder of the industry. Especially the ‘Cinderella’ networks and the stronger independents whose senior executives will doubtless jockey for senior positions in the emerging entities while they earn their way out to their fortunes or claim significant payoffs.
Following this logic, the only group we might expect to hear strong words from are the media owners, who surely have quite a bit to fear from the emergence of another truly massive media buying point. But, again, this ain’t necessarily so; the media are still overwhelmingly local, by which I mean national, and while their voices may be loud in their individual territories and amongst the politicians who crave the publicity afforded by their channels and pages, they don’t aggregate to a loud global voice.
ITV’s Adam Crozier came out bullish, and in fairness he might have a point as he’s already got a bigger worry in the UK; Group M is already >35% of UK media spend compared with POG’s putative ~28%.
Very few people can see much, if any, upside for anybody except Publicis’ and Omnicom’s top management and shareholders.”
Only the Googles and Facebooks (and the Newscorps!?) have that sort of scope. But while they are massive, they are also few. Though they should be concerned with the appearance of huge diversified agency networks with serious data, targeting, trading and aggregation capabilities of their own. Perhaps it even suits their highly-automated ways only to have two major customers to strike deals with?
(A point brought into sharper focus when bodies like the one I work for are reminding advertisers to insist on their right to free access to all anonymous data generated by and attendant to their media spends).
What is equally clear is that so far very few people can see much, if any, upside for anybody except Publicis’ and Omnicom’s top management and shareholders. I confess I’m in this camp myself. I foresee yet further consolidation, rising barriers to entry and reduction of choice. I don’t buy the ‘talent arguments’ – most real talent I’ve met wants to control its own destiny and the online economy has made that far, far more possible.
Nor do I believe that either better media prices or the ‘efficiency dividends’ touted at every merger (in this case, an impressive $500 million) will find their way back to many clients, however large. A view corroborated by another good piece, this time from AdMath, which suggests that agency consolidation has not stemmed media inflation, at least not in the US.
The best hope most parties have is the interest of the competition authorities, most likely in the US or Brussels, but perhaps in some local markets like France too. But even then it will be a long haul.
Dear reader, I must issue a caveat to accompany this, the first of my, hopefully many, monthly opinions for MediaTel’s Newsline. My day job representing British advertisers as a Director of ISBA is why I’ve been invited to write this column, so, naturally, that will be the perspective from which I will most often comment. If I sometimes venture to express my own, and perhaps differing, opinions, I’ll make it clear.