A recent announcement from Publicis, a Paris-based ad company, and New York-based Omnicom was released saying that they would be merging to become the world’s largest advertising group. The CEO of Publicis said, “This is a new company for a new world,” and with these two advertising giants now combined, it will certainly be interesting to see how it affects their own businesses as well as the competition.
The merger is, according to Publicis chief executive Maurice Levy, going to be able to help their business compete with many of the online marketers in a more effective way. He said that they, “will be able to face the exponential development of new Internet giants like Facebook and Google, changing consumer behavior, the explosion of big data, as well as handle the blurring roles of all the players in the market.”
While this merger will certainly position them well to compete with the growing online competition, many people believe it is more about cutting costs and keeping their investors happy. When two companies of this size merge, there are going to be significant redundancies which can be eliminated to save money and increase profits. Where and when any cuts will be made has yet to be seen, but it is all but inevitable that they are on the way.
The merger is still pending approval from authorities in both the US and France to ensure there aren’t any antitrust issues, but it is widely expected to go through without any difficulties. Once the merger has been completed the new company, “Publicis Omnicom” will have total sales of almost $23 Billion annually, and 130,000 employees.
For the initial 30 months after the merger the two CEOs will jointly lead the company. After this period of transition, Levy will be transitioning into a non-executive chairman position and Wren will move into the CEO role.
Taking over the top spot in the advertising world, Publicis Omnicom will pass WPP of London, which has been the largest advertiser for some time. WPP CEO Martin Sorrell released a statement which said, “It’s an extremely bold, brave and surprising move.”
This is one of the biggest mergers in marketing and advertising history, and will undoubtedly have many impacts long into the future.
