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Mon July 29, 2013
Ad Agency Merger Reflects New Realities Of Online Advertising
Originally published on Wed July 31, 2013 7:01 pm
MELISSA BLOCK, HOST:
It's Paris meets Madison Avenue. Yesterday two of the world's largest advertising agencies announced plans to merge. The French ad company Publicis is combining with the New York-based Omnicom. The merger is largely a response to the growing dominance of Silicon Valley companies such as Google and Facebook.
AUDIE CORNISH, HOST:
NPR's digital culture correspondent Laura Sydell joins us now to talk about what it all means. Hey there, Laura.
LAURA SYDELL, BYLINE: Hello.
CORNISH: So this merger and the dominance of Silicon Valley in advertising, I mean, does this mean that the days of the kind of Don Draper-like ad executive is over?
SYDELL: Kind of sad, but yeah. They're numbered is what they are. The new Don Draper may look a lot more like a geek than a debonair salesman. So online, a lot of advertising is based on data; so Google and Facebook collect information about us when we're on their sites, and then they serve us ads that are meant to target us very specifically. And it's different from the old model where companies had some vague sense of who is watching a given television show or seeing a certain billboard, and then try to put an ad there that would have a general appeal.
Now you go online and within a split second, companies bid for your eyeballs and push out an ad for you. And that bidding is largely done by machines now instead of salespeople, who used to have relationships with clients and media companies.
CORNISH: So how will this merger actually help old-time ad agencies compete in this new environment?
SYDELL: You know, in part it has to do with scale. So Omnicom and Publicis do have digital advertising divisions. The two companies also have collected data about individual customers - the more data you have, the better you can be at targeting your ads. And these two giants own some really big-name ad agencies. So Publicis owns Leo Burnett and Saatchi & Saatchi. They also have digital assets like Razorfish and clients like Bank of America and BMW. And Omnicom has BBDO Worldwide and FleishmanHillard Public Relations.
CORNISH: So do you really need people to come up with creative ads to put on these various platforms?
SYDELL: There're still some of that going on. But, you know, when it comes to ad creation even now we're seeing certain changes. So creativity driven by data. For example, last year, Samsung mined Twitter for critical comments about the launch of Apple's new iPhone and it used that information to shape its ads.
CORNISH: So just how big would this combined company be? I mean if the merger is approved, say, in both Europe and the U.S.?
SYDELL: Well, they would be the largest advertising company, spending roughly 100 billion a year - about 20 percent of the global ad business. And this is where there might be some regulatory hurdles. On the French side, Publicis is one of the country's great business success stories. So the French may not be so pleased about merging with an American company. And so, I imagine the French government will really scrutinize this merger.
They also have some rival clients. One of the biggest is a real old rivalry, Coke and Pepsi. Omnicom has Pepsi, Publicis does work for Coke. This can work out as long as they keep them housed in the different places. But we'll see how their clients feel about that.
CORNISH: So, Laura, is this a merger of an American company taking over a French company? Or the reverse, a French company taking over an American company?
SYDELL: You know what's unusual here? They're actually pitching this as a true merger of equals. And to show that, for two and half years - 30 months - John Wren of Omnicom, the CEO of Omnicom, and Maurice Levy who leads the Publicis are going to stay on as joint CEOs. And eventually, Levy is going to step down and become non-executive chairman. But for now, they're saying we are equals.
CORNISH: NPR's Laura Sydell talking about the planned merger of two of the world's largest advertising firms. Laura, thank you.
SYDELL: You're welcome.
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BLOCK: You're listening to ALL THINGS CONSIDERED from NPR News. Transcript provided by NPR, Copyright NPR.