There’s no such thing as a merger of equals

20005857_b480hhhhh_625x1000I stifled a chuckle as I read yesterday’s New York Times coverage of the proposed merger between global holding companies, Omnicom and Publicis.

Reporter Tanzina Vega said the “…deal is being billed as a merger of equals.” To which I respond, “Ha!”

As a refugee of WPP, and first-hand witness to countless, so-called mergers of equals at that global holding company as well as client organizations, I can tell you three facts:

– There is a clear winner and a clear loser in every merger of equals (Think: Daimler/Chrysler)

– Clients hate mergers because conflicts abound. As a result, many treasured, longstanding relationships will come to a screeching halt

– To quote strategy guru, Gary Hamel, large mergers and acquisitions are “…poor substitutes for strategy and vision, and almost always indicate neither company has either.” Despite what the press releases might say, this was a pure power move by both holding companies to add size. Period.

I can also tell you a tsunami of fear and anxiety is sweeping the hallways of every single Publicis and Omnicom agency. Why? That dreaded word: redundancy. That’s why.

Back office jobs in one group will be eliminated entirely. Several well-known firms in each holding company will disappear, or be absorbed into a former competitor’s folds (Think: GCI and Cohn & Wolfe), AND Madison Avenue will be awash in resumes.

One final note about the Times article (and this one is aimed squarely at our self-congratulatory PR trade media): there wasn’t a single mention of the PR arms of Omnicom or Publicis in the text. Further, reports Vega, the merger of equals was consummated to “…better capture profits from digital media and emerging markets.” PR wasn’t even an after-thought.

So, note to my peers at such legendary PR firms as MSL, FH, Ketchum and their various conflict brands: not only do you need to start thinking about your career paths, you should also start wondering about the importance of PR within your new, super- duper holding company.

9 thoughts on “There’s no such thing as a merger of equals

  1. Thanks for the post, Peter. Valid points to be sure. And, like you and the Media Post reporter have said, I believe there’s never been a better time to be an independent mid-sized PR firm.

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  3. Let’s make no mistake that this is mainly an all-out ATM raid by the boards and upper management of two holding companies. They see downward pressure on fees as the writing on the wall. Google and Yahoo are where the action is. Their “vision” of a “merger of equals” really means culling 130,000 global employees down to about 100,000.

    Advertising is becoming more like direct marketing in terms of relevancy and personalization. This move won’t help that or achieve any client or creative objectives. What does it have to do with personalizing content better suited to the user, or automation of data mining? I don’t know, but these two weren’t exactly on the cutting edge with digital platforms. Here’s an interesting take in Media Post:

    PR’s heart and soul has already become independent of the holding companies. I think it continues to put nimble players in the catbird seat. That’s not good for F-H, MSL and the like, but mid-sized firms, integrated creatives and a few biggie solo monoliths like Edelman and R-F can probably pounce on this.

  4. Great perspective, Steve. Funny, when I read all the stories about the merger, I wondered why there wasn’t more news about the PR agencies too. They were barely a footnote in the coverage. Not a good sign.

    In any merger as you said, there are winners and casualties – think about Time Warner and AOL. I wonder if some well-known PR and ad brands are destined to become the Pontiacs of the marketing world.

    Big can be good, but in an era of customization, can such a large organization can deliver breakthrough results or if it will get bogged down in politics and process?

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