Mega agency deal sparks job fears

The £23bn mega merger of Omnicom and Publicis, revealed this weekend, is likely to spark mass hysteria in agency circles as staff and bosses alike brace themselves for a raft of job-cuts and possible agency closures.
The landmark deal has in one fell swoop created the world’s biggest marketing and advertising powerhouse, ending WPP’s four-year dominance of the industry.
Although it has been hailed as a “merger of equals”, Omnicom’s revenues of £9.6bn are nearly twice those of Publicis on £5.7bn but the French marketing group is much more profitable, operating on 18% margins, compared with 15% at Omnicom.
One of the major issues will be how Omnicom’s direct and digital agencies – including Rapp, Targetbase Claydon Heeley, Agency Republic and Proximity – will work alongside Publicis’ businesses – including Publicis Chemistry, Kitcatt Nohr Digitas, Arc, Razorfish and Saatchi X.
Targetbase Claydon Heeley, for one, now has no chief executive, following the resignation of Steve Grout, who is joining Tangent Snowball. It is understood bosses at Omnicom’s so-called “Diversified Agency Services” were already planning to link up with fellow DAS member Rapp to smooth the transition process and placate clients. However, any potential successor to Grout may now be thinking twice whether he or she will have a job in six months’ time.
Job security will now be upmost in the minds of the 130,000 staff working across the combined operation. Some reports have suggested there will be “thousands” of job losses as a result of the merger, as the company seeks operational efficiencies of some $500m (£325m).
There is also the prospect of client conflicts – including Coca-Cola and Pepsi – to sort out, although if the group can build strong enough “Chinese Walls” many of the issues could be overcome.
In a joint press conference held in Paris over the weekend, Publicis boss Maurice Lévy said: “The communication and marketing landscape has undergone dramatic changes in recent years including the exponential development of new media giants, the explosion of big data, blurring the roles of all players … John Wren [Omnicom boss] and I have conceived this merger to benefit our clients by bringing together the most comprehensive offering of analogue and digital services.”
The HQ of the new company, to be called Publicis Omnicom Group, will be based in the Netherlands with operational headquarters in Paris and New York.

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