Curated by Stuart Fogarty stuart@admaticallycom for AFAO'Meara Advertising, Streamabout The Video Agency and Admatic Ireland.
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Publicis, the French Ad Agency group, are celebrating 90 years. To help with that, they've launched a fund for digital start-ups which includes funding (10 million euro). Ideas submitted will be judged by a panel of Publicis and partners for a launch on June 30th in eh, Paris. The website is here (you'll have to copy + paste) http://www.publicis90.com/#/publicis90 But a quick read of the rules, seems to be a little complicated....especially on the funding end. However, well worth a look. Credit too where credits due.
Publicis, one of the giants of the traditional Advertising Agency model and the Agency which failed to merge with Omnicom some months ago, has acquired a Digital Agency/Business, Sapient. For 3.7 Billion usd in fact. It's all cash at circa 25 dollars a share and creates 'Publicis Sapient' and through "integration" (job losses) between the two, claim to bring savings of 60 million a year. They also acquired 'Razorfish' recently. Sapient started in 1990 and largely was seen as a tech company but this deal brings it more into mainstream marketing. It advised companies on IT but was seen as an early-adopter of the Web and a fairly "cool" google-esque style and structure. What it shows again, is the role of the changing traditional Ad Agency where traditional media is now something of a futile pursuit. The money is in digital and the audience is in digital. Publicis, whom I one-time represented, were very much in the traditional space and at least, they are moving more into digital using cash to do it. However, culture will always be an issue.
You can't just be seen to be in digital, you have to want to be. But at least, they're recognising that and doing something about it. Good all round really.
Publicis and Omnicom call it off. The 50:50 mega-merger of 35 billion us dollars announced 9 months ago, is being eh, 'de-coupled'. The Agencies, which own a large number of established brands in the market, had difficulties in completing transactions in a timely manner (according to an Omnicom statement) and Omnicom have spent circa 48 million usd in the merger thus far. Reading between the lines, they're putting the blame on Publicis. It also seems that the announcement was communicated initially via Twitter (or it 'leaked') and Clients were not formally informed per se. Rumours abound of rows about key positions (typical merger nonsense) but one wonders why these sorts of issues weren't dealt with pre-merger? Seemingly the CFO position (who'd oversee the merger) was a big issue. Clearly, knowing both Agencies well, there was always going to be a French Versus American way of doing things and trust me, both are very, very different. The launch photocall (above) with The Eiffel Tower in the background, was the start of the "I am in control here" piece. Financially too, with savings of "$500 million" touted as a reason from the outset to do the merger, hardly seemed a good enough reason. It also puts WPP back to top of the heap without the new entity. And it damages the reputation of both Publicis and Omnicom in not being able to complete this. At least those "$500 million" in savings won't happen and so those job losses (the savings) are now safer. Apart from that, pretty pathetic.
TV is actually on a tipping point. A lot of us take the view that traditional TV is dying at a rapid pace but Saturday's story in the illustrious 'Financial Times' will only hasten things. It's a paper well read, by CEO's and Marketing Directors. The story is based around new Advertising spend data which shows, that after three consecutive decades of growth, it has finally peaked this year and now starting to decline - the tipping point. TV should capture 40% of the global 532 billion usd ad market in 2013 and then start falling. That data came from none other than Publicis ZenithOptimedia, reliable a source as you'll find. That 40% share will now go into steep decline. This is of course due to the rise of digital. The explosion of digital across multi-screens, was going to hit TV hardest always and in particular, the reluctance (ongoing reluctance) of TV stations to get involved with digital, has further accelerated their demise. A new breed of marketers too, has brought an opportunity to change and online video is also now a far sexier media buy, than traditional TV. For example, YouTube is surging + 50% with 66 billion usd in revenue this year. Google is also powering ahead on their GDN network. It is good news for digital providers and another breakthrough in their fight with TV stations who went to lengths initially, to try and put them out of business. But like a lot of businesses that simply refuse to accept digital as even an option, they lose out. And TV is digital's biggest scalp.
The merger announced yesterday of the 2nd and 3rd largest Ad Agencies, Publicis and Omnicom, is indicative of the threat of digital. You'll note the PR Merger photo above of both CEO's had the recognisable Arc de Triomphe as a backdrop.....lest anyone be confused who's in charge here. Publicis are a very proud French Group (I worked with them). Whilst creating the world's biggest Agency Group (leap-frogging WPP's 17 billion), they will have combined revenues of circa 23 billion usd. That's a long way short of Google's 50 billion usd and importantly, both agencies have been able to show little organic growth in a depressed, changing, Ad Agency landscape. They are established, mature, traditional Ad businesses who are suffering from losses of revenues to digital Agencies and consequently have been showing only single digit growth. Omnicom grew by 2% in the first half whereas Publicis by 1.3% and after suffering a 6%+ decline in Europe. Their new combined market cap is 35 billion usd whilst Google? 295 billion. Traditional Ad spending is slowing globally and even in new markets such as Asia and China, only showing 5-7% growth as Clients move away from the traditional Ad and Ad Agency, model. From a client viewpoint, the merger does bring more media muscle - bad news for already hard pressed media owners. However, conflict of clients will always be a problem here. Good creative has nothing to do with size except, a larger Agency will have more creative resources. The key to this is the merger savings (estimated at 500 million usd) in an attempt at helping profitability......but that's a lot of pain, a lot of job losses. Mergers like this, whilst improving shareholders income (both shareholder sets will be 50:50) through cost-savings, does not deal with the core issue - the traditional Agency model is wrong. Agencies give away their ideas in the hope to profit off the creation and implementation of the work itself. And they continually pooh-pooh digital which clients want, rather than jumping on board. We will see what happens but in order to achieve those "merger efficiencies" as they say, expect changes at a local country level. Which will mean mergers of local Agencies and redundancies. But fundamentally it's a response globally to one thing - the ongoing "threat" of digital to Ad Agency revenue. A case of, rather merge, than deal with the big issue..... (Pretty good insight here too from Business Insider http://www.businessinsider.com/heres-the-big-downside-to-the-publicis-omnicom-merger-2013-7)
