The emergence of Google, Twitter and Facebook is an acknowledged reason behind the proposed Publicis and Omnicom merger. The two agency giants surely want to gain scale in negotiating for access to their data. Or, possibly even blunt any designs the three have on becoming some version of media or even creative agencies.
There are other driving forces behind the merger such as cost savings, geographic footprints, etc. Certainly, bragging rights is somewhere in there.
Another floated is the scale a Publicis Omnicom Group would have to negotiate better ad rates for clients. The well-worn logic is the more one has to spend, the more leverage in negotiations, the cheaper the inventory.
Don’t count on that one. To start, there are already large buying entities, notably GroupM. So, it’s hard to envision some joint Omnicom-Publicis behemoth dramatically changing market dynamics.
Isolating TV, things might have been different a couple decades ago. Back then, individual agencies might have been able to negotiate a significantly better price for clients.
These days, as a rule, the buyers get similar rates. One entity might get a slightly lower increase in a given year or pay a little higher one in another. But is GroupM doing far better than the much smaller independent Horizon, for example?
If so, wouldn’t Horizon clients Geico and Capital One find their way over to one of the larger buying operations?
There’s another factor in national TV. Ad rates aren’t reset each year. Clients and agencies work off a base that for many was established years ago, which places some limits on the ability to land discounts.
To be sure, that dynamic might be different in the digital space, which is so new. When a site such as, say, Deadspin suddenly explodes in popularity, some advantage might come with scale. And that might validate some of the reasoning behind the Publicis-Omnicom combination offered for the digital sphere.
But back to TV. If scale mattered so much, why has Publicis been slow to maximize it as it is? Its networks Starcom MediaVest and ZenithOptimedia don’t go to market together a la GroupM.
Shareholders and clients may find themselves thrilled by the coming Publicis-Omnicom combination, but for TV sellers things shouldn’t change much.