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What The Publicis / Omnicom Merger Reveals About The Future Of Marketing

5 emerging trends contributing to the consolidation of the advertising industry.
by Aaron Paquette

future of marketing

Editor’s Note: I’ve wanted to write about the implications of the Publicis/Omnicom merger since it happened, but simply didn’t have a chance. Then I saw the post by Aaron Paquette of Vision Critical on their blog and breathed a sigh of relief; my burden was lifted because his thinking mirrored my own (and was presented in a more cogent way than mine would have been anyway!).

So, here is Aaron’s take. I think it’s spot on and will be interested in your thoughts in the comments section.

By Aaron Paquette

Advertising giants Omnicom and Publicis rocked the industry last week with their announcement of a planned merger. The alliance will create the world’s largest advertising company with $23 billion in revenue, toppling current market leader WPP plc.

Much of the conversation about the surprise megamerger surrounds its possible impact on the advertising industry, their clients and campaign creativity. But, if you want to know what’s on the horizon in marketing, look no further than this merger.

Here are five marketing trends that the deal highlights:

  1. Digital advertising will reign

During a live Q&A teleconference, both Publicis CEO Maurice Levy and Omnicom CEO John Wren repeatedly mentioned the growing influence of digital media in marketing.

“We will be in a position to better partner with them,” Levy said when talking about digital media giants such as Google and Amazon. Wren added, “Anything worth having three years from now is going to be digital because the whole marketplace is moving that way, even billboards these days.”

It’s not surprising that both CEOs mentioned digital. While ad agencies traditionally have been about TV, radio,and print, stats show that digital is growing very quickly.

At $66.35 billion, TV ad spending this year is still ahead of digital, but it is growing at a slower pace. Online technologies will continue to disrupt industries, and signs point to digital ad spending eventually taking over TV.

  1. More consolidation

The Publicis Omnicom merger is part of a larger consolidation trend. In the TV industry, several conglomerates own most cable networks, while local-market TV stations are also starting to join forces. In retail, Hudson’s Bay Company recently acquired Saks. Talks about mergers and acquisitions are daily news in technology, finance and food industries.

In the advertising business, consolidation offers some attractive advantages. Creativity and economies of scale are two obvious reasons to merge, but there’s more. Scale provides big agencies better negotiating power. Controlling 40 percent of ad spending in the world, the proposed Publicis Omnicom Group can leverage its size when talking to media companies and publishers. From the clients’ perspective, having an agency this big will make it more difficult to negotiate fees.

Clearly, the merger mania is making a comeback. Look for the Publicis Omnicom deal to spark a new wave of consolidation on Madison Avenue.

  1. Data is the name of the game

During the announcement of the merger, Levy was quick to use the “big data” buzzword. In the press release, Publicis Groupe CEO 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 of the roles of all players and profound changes in consumer behavior.”

Access to consumer data will benefit the Publicis Omnicom Group, but it is also potentially a good deal for clients. At least in theory, with more data, the group can provide smarter decisions to advertisers. But, not everyone is convinced that the merger will result in better data capabilities. Clients generally own the rights to consumer data, so merging two ad agencies will not necessarily result in more data sharing. Furthermore, agencies don’t need scale to extract value from big data.

In any case, the fact that data is part of the conversation about this deal highlights the growing importance of collecting, managing, and making sense of consumer data. It’s starting to happen now, but in the future, companies that provide a platform for data collection will rule the business world.

  1. More personalized advertising

The Publicis Omnicom deal demonstrates how the business of marketing is becoming more personalized. Traditionally tasked with campaigns that have mass appeal, most agencies are not equipped to enable personalized advertising. However, with more data, the Publicis Omnicom Group can potentially become a bigger player in this trend.

The personalization of ads is just getting started. While the use of cookies has been in place for a while now, how advertisers utilize the data is becoming more sophisticated. A small number of advertisers now use fast-paced, algorithmic bidding systems to deliver relevant display ads within seconds.

Consumers can expect to see ads targeted more specifically at them. As more companies collect and use data, advertisers will deliver more personalized content based on information that consumers share through loyalty cards, social media activity and credit card histories. While the advertising of the past was more about clever catchphrases, the advertising of the future will focus on timely and personalized content.

  1. Consumer feedback will be integral

With big data comes big research opportunities. Right now, we are in the “Wild West” days of big data research, with most companies collecting huge amounts of data without a concrete strategy in place.

As advertisers experiment more with personalized advertising, research needs to become more strategic. Smart companies will inject consumer insights back into the research practice. Big data allows companies to measure behavioral and transactional data, but it doesn’t reveal attitudinal data. To deliver relevant ads that people will actually like, companies will need to better understand why people do what they do, and they can only achieve this by talking to their customers.

Consumers will also be integral in crafting creative content.  As agency veteran David Droga pointed out in a New York Times article, technology is an enabler in advertising, but it doesn’t completely replace storytellers. Advertisements will only resonate with consumers if they reflect a story that is relevant and relatable.

Finally, consumer insights play an integral role in the small but growing pressure to restrict access to big data. Eight out of 10 Americans, Canadians,and Britons are already opposed to private companies using web data, and concerns about data privacy legislation are emerging in some countries. Consumers want to get heard, but increasingly they want companies to ask for permission first before using their data. If companies want to continue to gather consumer data, they need to do a better job of inviting people into the conversation through social media, insight communities and other online platforms.

The most successful marketers usually accurately predict the future. They have a grasp of how technology will disrupt industries. More importantly, they have insights on what consumers need in the future. Only time will tell if the Publicis Omnicom merger will benefit the advertising industry, advertisers and consumers. For now though, the news about the deal highlights some of the issues that marketers will need to contend with in the age of the consumer.

Advertising giants Omnicom and Publicis rocked the industry this week with their announcement of a planned merger. The alliance will create the world’s largest advertising company with $23 billion in revenue, toppling current market leader WPP plc.

Much of the conversation about the surprise megamerger surrounds its possible impact on the advertising industry, their clients and campaign creativity. But, if you want to know what’s on the horizon in marketing, look no further than this merger.

Here are five marketing trends that the deal highlights:

  1. Digital advertising will reign

During a live Q&A teleconference, both Publicis CEO Maurice Levy and Omnicom CEO John Wren repeatedly mentioned the growing influence of digital media in marketing.

“We will be in a position to better partner with them,” Levy said when talking about digital media giants such as Google and Amazon. Wren added, “Anything worth having three years from now is going to be digital because the whole marketplace is moving that way, even billboards these days.”

It’s not surprising that both CEOs mentioned digital. While ad agencies traditionally have been about TV, radio,and print, stats show that digital is growing very quickly.

At $66.35 billion, TV ad spending this year is still ahead of digital, but it is growing at a slower pace. Online technologies will continue to disrupt industries, and signs point to digital ad spending eventually taking over TV.

  1. More consolidation

The Publicis Omnicom merger is part of a larger consolidation trend. In the TV industry, several conglomerates own most cable networks, while local-market TV stations are also starting to join forces. In retail, Hudson’s Bay Company recently acquired Saks. Talks about mergers and acquisitions are daily news in technology, finance and food industries.

In the advertising business, consolidation offers some attractive advantages. Creativity and economies of scale are two obvious reasons to merge, but there’s more. Scale provides big agencies better negotiating power. Controlling 40 percent of ad spending in the world, the proposed Publicis Omnicom Group can leverage its size when talking to media companies and publishers. From the clients’ perspective, having an agency this big will make it more difficult to negotiate fees.

Clearly, the merger mania is making a comeback. Look for the Publicis Omnicom deal to spark a new wave of consolidation on Madison Avenue.

  1. Data is the name of the game

During the announcement of the merger, Levy was quick to use the “big data” buzzword. In the press release, Publicis Groupe CEO 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 of the roles of all players and profound changes in consumer behavior.”

Access to consumer data will benefit the Publicis Omnicom Group, but it is also potentially a good deal for clients. At least in theory, with more data, the group can provide smarter decisions to advertisers. But, not everyone is convinced that the merger will result in better data capabilities. Clients generally own the rights to consumer data, so merging two ad agencies will not necessarily result in more data sharing. Furthermore, agencies don’t need scale to extract value from big data.

In any case, the fact that data is part of the conversation about this deal highlights the growing importance of collecting, managing, and making sense of consumer data. It’s starting to happen now, but in the future, companies that provide a platform for data collection will rule the business world.

  1. More personalized advertising

The Publicis Omnicom deal demonstrates how the business of marketing is becoming more personalized. Traditionally tasked with campaigns that have mass appeal, most agencies are not equipped to enable personalized advertising. However, with more data, the Publicis Omnicom Group can potentially become a bigger player in this trend.

The personalization of ads is just getting started. While the use of cookies has been in place for a while now, how advertisers utilize the data is becoming more sophisticated. A small number of advertisers now use fast-paced, algorithmic bidding systems to deliver relevant display ads within seconds.

Consumers can expect to see ads targeted more specifically at them. As more companies collect and use data, advertisers will deliver more personalized content based on information that consumers share through loyalty cards, social media activity and credit card histories. While the advertising of the past was more about clever catchphrases, the advertising of the future will focus on timely and personalized content.

  1. Consumer feedback will be integral

With big data comes big research opportunities. Right now, we are in the “Wild West” days of big data research, with most companies collecting huge amounts of data without a concrete strategy in place.

As advertisers experiment more with personalized advertising, research needs to become more strategic. Smart companies will inject consumer insights back into the research practice. Big data allows companies to measure behavioral and transactional data, but it doesn’t reveal attitudinal data. To deliver relevant ads that people will actually like, companies will need to better understand why people do what they do, and they can only achieve this by talking to their customers.

Consumers will also be integral in crafting creative content.  As agency veteran David Droga pointed out in a New York Times article, technology is an enabler in advertising, but it doesn’t completely replace storytellers. Advertisements will only resonate with consumers if they reflect a story that is relevant and relatable.

Finally, consumer insights play an integral role in the small but growing pressure to restrict access to big data. Eight out of 10 Americans, Canadians,and Britons are already opposed to private companies using web data, and concerns about data privacy legislation are emerging in some countries. Consumers want to get heard, but increasingly they want companies to ask for permission first before using their data. If companies want to continue to gather consumer data, they need to do a better job of inviting people into the conversation through social media, insight communities and other online platforms.

The most successful marketers usually accurately predict the future. They have a grasp of how technology will disrupt industries. More importantly, they have insights on what consumers need in the future. Only time will tell if the Publicis Omnicom merger will benefit the advertising industry, advertisers and consumers. For now though, the news about the deal highlights some of the issues that marketers will need to contend with in the age of the consumer.

- See more at: http://www.visioncritical.com/blog/emerging-trends-contributing-to-advertising-consolidation#sthash.ywv9VIyv.dpuf

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4 Responses to “What The Publicis / Omnicom Merger Reveals About The Future Of Marketing”

  1. Ellen Woods says:

    August 8th, 2013 at 9:28 am

    HI Aaron:

    Thanks for a great article that provides a very balanced view of the industry and where things are headed. Change is an inevitable part of all processes and as lifestyles change, so will the way individuals receive and process communications. Any type of major disruption has fits and starts before it reaches accelerated momentum and becomes a tipping point initiating change.Technology has outpaced our ability to use it for awhile, and when we reach an equilibrium point, personalized marketing will become a reality. The real question now is how quickly we leverage technology and reduce our dependence on mass marketing by evolving toward a more localized approach to consumer spending. The much talked about “herding” mentality (@herdmeister) won’t disappear because it’s human nature; but it won’t likely be driven by big marketing campaigns and “hot” products. However you meld the data, functionality will always trump; and the agencies who recognize and market companies and/or products that have a depth of appeal and a solid, transparent business positioning will succeed because the positioning will have the flexibility of multiple advantage points. What is likely lost is the ability for first to market to have a significant profitability advantage. Just look at the changes within the wireless carrier industry if you doubt the direction.

  2. Brian Jacobs says:

    August 8th, 2013 at 5:49 pm

    I’m afraid I don’t buy the ‘bigger the buyer the cheaper the prices’ line at all; and I’ve spent over 35 years in and running media agencies.This might once have had some truth in it, but it hasn’t been so for years. The fact that those with a vested interest in bigger being better keep repeating the mantra doesn’t make it any more true.
    In fact I think that this intended merger will be the moment that eventually leads to the demise of these agency holding groups – at least in their present form. Ironically perhaps it could lead to a growth in smaller, more creatively-driven agencies focussed more on serving their clients’ needs and less on serving the short term needs of financial markets.
    You can read why I think like this here: http://www.bjanda.com/blog/bigger-better-ummm/.
    There will be further blogs on this topic soon!

  3. Julian Dailly DELTA VALUE says:

    August 21st, 2013 at 8:45 am

    Great article setting out an optimistic view of both present and future. My hunch is simpler: companies outside of ad giants’ traditional competitive set (Google et all) are rapidly eating into their forecast earnings. Investors are worried and management response is to consolidate to cut cost from duplicate overheads sitting on top of businesses that sell very similar products and services.

    For all the prosody, most commentators have forgotten the basics of when and why industries consolidate: because there’s less profit to share out and even fewer untried ideas.

  4. 3 Ways the World of Market Research is Evolving | March Communications says:

    August 23rd, 2013 at 1:23 pm

    […] Case in point, Aaron Paquette, an EVP at the cutting-edge firm Vision Critical, describes in his assessment of the the Publicis/Omnicom merger that advertising is only getting more ingrained within Big Data, […]

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