The world’s biggest advertising agency is in the making as the bosses of US giant Omnicom and France’s Publicis signed a merger deal.
It could bring rival accounts such as Coca-Cola and PepsiCo as well as Samsung and Apple under one roof raising potential conflicts of interest.
But the two chief executives said there would be “strict firewalls” to protect clients’ interests.
Publicis’ Maurice Levy told reporters that the merger was necessary in a changing world. He said it would mean they could “face the exponential development of new internet giants like Facebook and Google, along with changing consumer behavior and the explosion of big data,” as well as handle what he called “the blurring of roles of all the players in the market”.
What is being referred to as “a merger of equals” would create a company which had over 17 billion euros in revenue last year – leap-frogging it ahead of current world number one Britain’s WPP.
The boss of WPP Martin Sorrell called it “an extremely bold,
brave and surprising move,” adding: “Further consolidation in the industry is inevitable.”
But this is still a long way from a done deal.
The biggest stumbling block is getting approval from competition regulators in the more than 40 countries where they both operate, and where rivals and even some advertising clients are likely to object.
Chris Beauchamp, a Market Analyst, with IG, spelled out the problems: “The idea of having an advertising company controlling a large share of the market is something that you probably should be worried about I think, given the importance of advertising spend to many companies and the sensitivity of companies to that advertising spend in harder times. It’s something I think that regulators are going to take a long hard look at.”
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