Omnicom + Publicis: The Account Executives vs. The Engineers

31st July 2013 1 Comment

Over the weekend the reality of big data came into sharp relief as two agency stalwarts, the Omnicom Group and Publicis Groupe announced their merger to form a new media powerhouse.  As a former agency account guy, the scale of new company is massive.  With combined revenues of more than $22B, the new Publicis Omnicom Group is now the clear global leader, surpassing the WPP. The combined company is big by any measure:  $35Bn market cap, more than 130,000 employees, and works with the biggest and best brands in the world – McDonald’s, Visa, Coke and Pepsi.  But the real news is the reason they decided to merge: big data.

According to Maurice Levy, Chairman of Publicis as quoted in the New York Times.

“The communication and marketing landscape has undergone dramatic changes in recent years including the exponential development of new media giants, the explosion of Big Data, blurring of the roles of all players and profound changes in consumer behavior,” he said. “This evolution has created both great challenges and tremendous opportunities for clients. John and I have conceived this merger to benefit our clients by bringing together the most comprehensive offering of analog and digital services.”

While Mr. Levy’s quote is correct, the reality is both more simple and more complex.

The ad giants of old, romanticized by TV shows like Mad Men, are now fighting a war on multiple fronts.  The smooth talking account guys and the martini lunch have been replaced by coders wearing hoodies.  First Google, and more recently Facebook and Twitter have started to dis-intermediate the agency model by serving up better ads and connected experiences.  The ability to target the right audiences and the right offers based on user preferences has turned the old world broadcast model into a highly personal and targeted experience.

The rise of social networks as well as blogs and forums have created an unprecedented amount of data that is just now starting to be understood by companies and brands for what it is: a treasure trove of intelligence on markets, segments and customers.

The ability to capture social data at scale as was pioneered by early leaders like Sysomos, Radian6, Dachis Group and Netbase, and spawned a whole network of new innovative companies like Face Group, the Bloom Agency, SecondSync, snd Whisper who are helping translate this data into actionable analytics.  The better these solutions become, the less brands and enterprises need to depend on their agencies.

The merger of Publicis and Omnicom signals several significant changes not just for advertising, but for the larger market:

  1. Agencies are now going to double down on social data
    Starcom MediaVest Group, a division of Publicis, made waves earlier this year with their multi-million dollar deal with Twitter.  Expect more of these deals as agencies use their leverage and client scale to negotiate ad deals with social networks and get smarter about using the data.
  2. Agencies are going to get into the software game
    As Marc Andressen has famously said, software is eating the world.  In order to avoid being eaten, the agencies big and small are going to accelerate building their own solutions to capture data and service clients.
  3. The analyst/engineer is the new AE
    When I worked in ad agencies, the common metric was to add one new person to the account team for every $1M in billing.  But in the old world the competition was another agency, not the engineering-centric cultures of Google, Twitter and Facebook.   Now it is much more likely that the new FTE on an account will be an analyst or developer vs. another account guy.

The agency world is about to undergo massive change, which will create new leaders and new innovation, but it will also be hugely disruptive. While the combined scale and resources of Publicis Omnicom should be respected, it is hard to reconcile big data and technology innovation aspirations with the fact that Publicis runs its global business on Lotus Notes.  When your email system was born before Mark Zuckerberg, it is little difficult to assert your technical superiority or claim to innovation.

With the announcement Omnicom/Publicis have taken a step forward, but without radical changes, the agencies AEs will be armed with a knife at a gun fight.

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