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Why the PubliCom focus on mega spenders opens the door for start-ups to sweep up national accounts

Over the last week there has been a frenzy of speculation about the proposed merger between Omnicom and Publicis. It probably goes without saying – but I will – that both Mr. Wren and M. Levy will have discussed in great detail the implications of this gigantic move, and many of the issues raised will have already been dealt with.

However it seems to me two issues have not been mentioned that are bound to crop up down the road – plus one interesting opportunity.

The first is the ‘brand management’ of the various networks and how the leadership of them is given very careful consideration.

In Omnicom’s case the three advertising agency networks of BBDO, DDB and TBWA need to be differentiated and stand for something that attracts different types of clients. Thinking about the local UK market, each are in different stages of their evolution.

AMV/BBDO has enjoyed consistent management for a very long time with Michael Baulk at the helm for a decade or so to then handing the reins across to Cilla Snowball, another ‘lifer’ from within the agency. DDB has recently gone through a marriage with Adam & Eve taking control, thereby injecting a different kind of culture and product to the AMV brand. Then we have the TBWA brand which has seen a number of leaders come and go over the last decade.

Interestingly AMV has stayed at the top in the UK league tables for well over a decade whereas DDB and TBWA have had more of a roller coaster ride over the same period of time.

On a global scale ensuring each brand maintains a distinctive personality will be essential on many levels, not least of which is to avoid the pressure to go for market share whatever the impact might be on the brand. This will be a big challenge in a business of the scale envisaged ($23bn turnover).

The second issue is where clients fit in to this. Some simple maths help to illustrate the point. An annual ten per cent increase for a business with gross income of £50m is £5m, whereas a ten per cent increase of a business with a gross income of £500m is £50m. Ignoring the loss of income in a calendar year which always happens, generating an extra £5m feels like a much easier task than shooting for £50m. Therefore the scale of clients becomes a real issue for a big tanker which in turn means smaller spenders will not be getting the attention they would hope for.

So maybe we will begin to see an acceleration of the divide between the mega spenders and everyone else. I experienced this at Ogilvy in the UK. After developing and launching MORE TH>N for RSA with an annual fee income of about £1m I found that my New York colleagues were not particularly interested for two reasons.

It was domestic to the UK and therefore not scale-able on a global level. As it represented approximately 0.1 per cent of the global income this is understandable. However for the UK operation is was very important, given it was a first big result for Ogilvy for some considerable time and the income was significant for the UK business.

This reality is inevitable and will become an increasing issue for clients, in particular domestic clients below a certain level of income.

So maybe the opportunity around the corner, in the agency sector generally, is for more start-ups. The reasons are fairly obvious. The divide on income levels between the mega spenders and the more modest spenders is likely to become more pronounced and therefore it will be very easy for a modest spender to feel lost in a global giant. It is human nature to resource business on a commercial basis, putting the best talent on the most important clients based on revenue.

Also it is highly likely the management of the big networks will tend to be risk averse whereas a good local outfit is more likely to be the opposite. Smaller spenders need to be adventurous to get noticed.

So maybe Omnicom and Publicis, having decided to go for their ambition of global dominance, will have also created a window of opportunity for ambitious folk who fancy having a go on their own. (As an aside I think it is very interesting how Droga5 are getting so much attention ploughing their own furrow, a sign that inventiveness and creativity allow a 300 strong business in New York to punch way beyond its weight).

The great thing about the advertising industry is how it never stops morphing, changing the playing field and always leaving the back door open for a bunch of chancers who fancy a go on their own. May it always remain so.

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About Paul Simons

Paul joined Cadbury-Schweppes in brand management and then moved to United Biscuits. He switched to advertising in his late 20s, at Cogent Elliott and then Gold Greenlees Trott. He founded Simons Palmer Denton Clemmow & Johnson in the late 80s, one of the leading creative agencies of the 90s. Simons Palmer then merged with TBWA to create a top ten agency. Paul then joined O&M as chairman & CEO of the UK group. After three years he left to create a new AIM-quoted advertising group Cagney Plc. He is now a consultant to a number of client companies. Paul also shares his thoughts on his blog. Visit Paul Simons Blog.

One comment

  1. I think Paul’s piece gets right to the point. The biggest clients will be properly looked after and will probably feel at home in the all-new large-scale operation. The smaller-scale client will probably see how it goes for a bit and then perhaps might sense that they aren’t getting the attention they were. Whether this is true or not, perception is all and I think the merged management in the new outfit could find it rather difficult to hold onto some smaller-spend relationships whilst having to be on-call for their ‘whopper’ client masters 24/7.

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