Clash of the Mad Men in $35bn advertising mega-merger

 

 

Sir Martin, the chief executive of WPP, which will lose its crown as the world’s biggest advertising group as a result of the Publicis-Omnicom merger, said: “This is a seismic shock to the industry and will make clients and people think about what they’re doing. This gives us a big opportunity.”

Publicis, the owner of agencies Saatchi & Saatchi and Starcom Media Vest, and Omnicom, which owns Abbott Mead Vickers and Adam & Eve DDB, want to merge to get greater scale when they negotiate with media owners.

Messrs Levy and Wren claimed they would save €500m (£430m) by uniting the companies, which will employ 130,000 worldwide, creating the world’s biggest advertising group by revenue.

Analysts at Berenberg and Citigroup suggested the savings targets were “optimistic” and regulators will need to approve the deal. Publicis has a 21.1 per cent share of the global media-buying market and Omnicom has 14.5 per cent. The combined 35.6 per cent moves them above WPP on 28.1 per cent, according to analysts  at Recma.

In the Americas, Publicis Omnicom will have a 41.6 per cent share, although WPP will remain dominant in Europe, including the UK. The broker Liberum Capital reckoned Publicis and Omnicom would suffer “some likely client losses” as the two companies work for rival clients such as Coca-Cola and Pepsi.

Mr Wren admitted conflicts between clients could be a challenge. “Do I expect to have difficulties? Yes. Do I expect to have resolutions? Absolutely,” he said.

Rival ad agencies were quick to suggest they would benefit at the expense of Publicis and Omnicom, especially as the merger could take six months and clients do not always regard bigger as better when it comes to producing strong creative work. “More agile groups can only gain,” Don Elgie, the chief executive of the London-listed marketing group Creston, said.

WPP’s Sir Martin pointed out that some analysts were likening the Publicis Omnicom tie-up to the ill-fated merger of Saatchi & Saatchi and Bates in 1987. “It was driven by the egos, the turf, the territory and the money rather than industrial logic,” he said.

Both Publicis and Omnicom have faced speculation about succession planning as their chief executives are veterans who earn huge pay packages and have been reluctant to retire.

By merging the companies, Messrs Levy and Wren get to stay in charge for a further 30 months, when the Frenchman will become non-executive chairman and the American will be sole chief executive.

Contrasting styles: Men behind the merger

Maurice Levy

The 71-year-old is suave and charming but no one stays at the top for 25 years without being ruthless, with more than a touch of ego. Last year, he jousted with the French president François Hollande, who criticised Mr Levy’s €16.2m (£14m) bonus.

Some say the Publicis boss is the real winner in this “merger of equals” as the group has only $8.8bn (£5.7bn) in revenues compared with Omnicom’s $14.2bn. Mr Levy, who has been with Publicis for more than 40 years, has failed to groom a successor but admirers say he has been quick to embrace digital and emerging markets for clients such as Nestlé and Procter & Gamble.

Now he stays as co-chief executive for two and a half years, before becoming non-executive chairman — which would be frowned upon under UK corporate governance guidelines.

John Wren

Mr Wren, 60, keeps a low profile, eschewing the chance to hold forth publicly each year at the showpiece Cannes Lions advertising festival — unlike Maurice Levy and WPP’s Sir Martin Sorrell. He has been at the helm since 1997 and, like others, has not solved the succession question, which is why this merger might appeal.

Mr Wren stays as co-chief executive and then takes sole charge after two and a half years. He earned $14.8m last year. Creative types are full of praise for Mr Wren as he leaves his agency bosses to get on with looking after clients such as BT and Volvo. However, critics claim the US giant is too federated and has fallen behind in digital and emerging markets. WPP snatched Omnicom’s title as the world’s biggest ad group in 2008. Said to be a tough operator despite his hands-off style.

 

 

 

Start your day with The Independent, sign up for daily news emails
Sport
sportSo, how closely were you paying attention during 2014?
Arts and Entertainment
Dennis speaks to his French teacher
tvThe Boy in the Dress, TV review
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
The Plaza Theatre in Atlanta, Georgia was one of the 300 US cinemas screening
filmTim Walker settles down to watch the controversial gross-out satire
Arts and Entertainment
Amy Adams and Christoph Waltz in Tim Burton's Big Eyes
film reviewThis is Tim Burton’s most intimate and subtle film for a decade
Life and Style
Mark's crab tarts are just the right size
food + drinkMark Hix cooks up some snacks that pack a punch
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music14 more 'Rebel Heart' tracks leaked including Pharrell Williams collaboration
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all