Ad world reacts to Omnicom-IPG deal, Marketing & Advertising News, ET BrandEquity

Ashish Bhasin, founder, Bhasin Consulting Group

“I feel that the process of consolidation has already started in advertising and media. In media, the Star India-Viacom18 deal is done, while the Sony-Zee deal almost went through.

“In advertising, the five-six holding companies already control about 80% of the market share — globally and in India. So, further consolidation will create stronger players, which will help agencies get the right value for their services. When you have scale and financial clout, you’re able to invest more in technology, in AI, and more importantly, in people.

“Over the years, we’ve been denuding the talent pool. The quality of people coming in is worse than earlier. But with more money and resources and better pricing being extracted, I hope that this will reverse.

“In India, the process of consolidation of smaller agencies has been ongoing. For example, at Dentsu, when we had made about 12 acquisitions, it was a strategy for inorganic growth.

“But this needs to be managed carefully. Omnicom’s attempted merger with Publicis 10-12 years ago was a total disaster. Clients walked out, employees were threatened and unhappy. When Dentsu acquired Aegis, they spent time on sorting the people issues, which was key.”

Lloyd Mathias, independent director and former senior marketer

“The deal is likely a result of three mega threats to the traditional ad business:

• The increased dominance of the digital majors — Alphabet, Meta and Amazon — in clients’ advertising decisions.

• The looming threat of AI, which is disrupting the advertising business with cheaper and faster offerings.

• Big strategy consulting firms eyeing the marketing services space and buying out ad agencies.

“Over the past few years, big tech companies have been encroaching on traditional advertising and media agencies domains by offering direct-to-client advertising tools and marketplaces to buy and sell goods and services.

“The big tech firms with their stranglehold on consumer attention with mega platforms like Google, YouTube, Facebook, Instagram and TikTok are already more than 60% of the global advertising market. Many of them are now cutting deals directly with clients.

“AI is also simplifying the buying journey and is able to create sharper, more relevant communication, even though creative is still an ad agency domain.

“Strategy consulting firms like Bain, Accenture Deloitte, PwC, etc, have better pricing power and deeper connection with the C-suite. They are also masters of upselling and cross-selling when offering creative services.”

Sam Balsara, chairman, Madison World

“I had predicted last year that two of the six big holding companies would merge. And it inevitably happened. In all probability, IPG, fresh from recent losses, approached Omnicom for this merger. Will there be more such mergers? Yes, but not at this scale.

“I think the pressure to dramatically reduce cost structures started some time ago and will continue into the future as well. And specially when there is pressure at the client’s end. There is a desperate need to look for new skills [in an AI world] and to eliminate routine tasks that can be taken up with machine learning. This can be a catalyst to start consolidations at all levels. And all for the good of the industry.

“Could this new deal be a repeat of Omnicom’s failed attempt to acquire Publicis back in 2013? I don’t anticipate something similar happening because that was only the first time and the teams now would be better prepared.”

Ashish Khazanchi, co-founder, Enormous Brands

“We don’t know the intricacies of this deal yet, but both these networks are already gargantuan entities in this space, and I don’t think there is much by way of new capabilities or skill sets they already don’t offer.

“It does create a substantial amount of scale for efficiencies — firstly to do with media data, and second, with the operating efficiencies of the entire network.

“And while it would mean great cost efficiencies for the two, it’s not so much an exercise in top-line management as it would be in bottom-line management. They will not necessarily grow more together but manage costs together much better. The implication on the industry is that a lot of the competitiveness which existed in this space because of the severe fragmentation earlier will come down.

“I feel it’s a great time now for an independent [agency] because there are bound to be conflicts of interest in the [new] network. There would be clients looking for more nimbleness rather than scale from their partners.”

Gautam Reghunath, co-founder, Talented

“From the outside, it looks like corporate polyamory minus the romance. But while this tangled web of consolidation is altering the industry landscape, there’s an opportunity here. As the big players blur into monoliths, they’re inadvertently creating the most fertile ground imaginable for independents.

“I’m seeing this as a referendum on marketing services and advertising itself, a reminder that in an age of mass consolidation, true innovation will spring from the margins. Ultimately, no matter what size your agency pretends to be, the truth is embarrassingly simple: It all comes down to the tiny handful of people actually getting the work done.”

Harshil Karia, founder, Schbang

“The merger signals a significant shift in the advertising industry, underscoring the importance of scale in today’s competitive landscape. But while size may provide leverage in the media domain, the true test will lie in driving consistent innovation in creative and tech solutions. This relatively silent and immediate announcement, unlike the very public Omnicom-Publicis merger attempt, reflects a strategic approach to consolidation.”

• Published On Dec 11, 2024 at 12:36 AM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETBrandEquity App

• Get Realtime updates
• Save your favourite articles

Scan to download App