The recent merger between NY-based Omnicom and Paris-born Publicis Groupe creates the world's largest marketing and advertising conglomerate, officially surpassing WWP. The partnership is indicative of an industry needing a shake-up. While marketers are predicted to spend $116B on digital advertising (according to eMarketer), brands are less and less satisfied with results from traditional online advertising and are looking for more creativity, consumer engagement and true influence. When budgets are increasing in an industry that is becoming less effective, it means the market is hungry for alternatives. If done strategically, the merger gives Publicis Omnicom Group the opportunity to leverage several trends:
It's about the conversation, not the ad
PR firms are stealing digital budget from advertising because they are better at social media. The addition of Omnicom's Fleishman-Hillard, Porter Novelli and Ketchum with Publicis' ad firms like Leo Burnett and Saatchi & Saatchi could create a dominant force in social media for brands.
The power of the digital influencer
Consumer purchase behavior is radically different from it was even 5 years ago. Ads don't have nearly the influence they did on purchase behavior but actual content does. Digital content from peers and those with loyal followings on platforms like Facebook, Twitter, Pinterest, YouTube and blogs has become the biggest influence on consumer purchase decisions. If Omnicom Publicis can invest their massive creative resources into creating content solutions for brands (not just advertising), they will change the world of advertising.
Scalability
Both CEO's acknowledged the need for advertising agencies to better leverage technology and data to not only scale reach but to better target key audiences. This means finding innovative technologies that let them harness and distribute creative solutions on Facebook, Twitter, YouTube and Pinterest and mobile. Since most of the innovation in these areas is being driven by nimble start-ups, I predict we'll see some interesting partnerships or acquisitions in the next few years.
Can they move fast enough?
The challenge will be whether they can move fast enough to take advantage of the rapid pace of innovation in the digital space. Sometimes bigger isn't always better when it comes to the web and smaller companies who are more agile with less corporate bureaucracy can take market share simply because they can respond faster to marketers who want everything yesterday.
The reality is that marketers will spend their money with whoever does digital marketing best. That might be with an ad agency, PR agency, a social media partner, in-house or the 20-something kid down the block who knows how to mobilize millions of his peers using technology and data. Even ad networks like Hearst Media and Merideth Corp are taking a piece of the social spend because they have innovative offerings like influencer marketing, content strategies and mobile solutions. If Publicis Omnicom Group wants to truly dominate in digital marketing, they will have to think like a global powerhouse but move like a start-up.