The penned merger of equals between Publicis and Omnicom takes two large networks of agencies and folds them into one behemoth holding company significantly larger than WPP, which would fall into second place. To gain strength in building a future, Publicis has been aggregating large digital shops to complement its traditional creative agencies; at the same time, Omnicom has been amassing a large contingent of small shops that grew quickly under its Diversified Agency Services (DAS) umbrella of digital firms in the race to lead the "new" thing.
Why merge now? The ad agency world and the technology world are on a collision course, centered on how well companies manage their business or consumer customer. I first mentioned this in a post about change management in my Forbes blog almost exactly one year ago. As agencies find themselves up against tech services giants like IBM, Accenture, Sapient and Deloitte, they are being asked to deliver:
Marketing and business strategy based on deep data. No marketing strategy is competitive today without the strength of managing and interpreting data. Both firms have invested in disparate platforms to build insight into the planning process. Agencies like Rosetta and RAPP use data to inform the strategy to build customer engagement, getting ad efforts closer to Moneyball-like results.
Cannes this year is hosting more and more evidence of the disappearance of lines between “digital” and “advertising”: A mobile category was launched; the new Branded Content and Entertainment category includes subcategories such as “best use or integration of user generated content”; Twitter co-founder Jack Dorsey was named Media Person of the Year and . . .
. . . WPP used the international advertising festival to announce it is acquiring digital agency AKQA and incorporating it as a separate network within WPP.
AKQA is a great pickup for WPP. It's not only one of the biggest indies left but one of the best at blending creative and technology skills in one organization — a mix that doesn’t always live together easily.
It also fills a hole for WPP. AKQA aspires to a category of agencies I call “brand transformers” that are about more than communications and look to leverage digital capabilities to help clients enter new adjacent product and service areas.
Very interesting that it will be a standalone brand and not folded into one of WPP’s existing networks. Digital agencies VML and Blast Radius bring similar capabilities but are locked in the Y&R network; WPP gains flexibility by having AKQA “at large” in its holdings. In addition, AKQA is a little too big to fold into another network easily, but will need to build heft quickly if it wants to remain separate. Otherwise, in a couple of years, WPP will merge it with other assets.
I think it’s likely Interpublic and Omnicom will react. WPP clearly sees digital as essential to its future. This acquisition definitely puts some distance between WPP and Omnicom, which had been pretty close, and Interpublic, which has a couple of strong assets but doesn’t have the strategic focus that WPP and Publicis do.