Forget Mad Men -- the math men are in charge
Publicis CEO Maurice Levy (right) and Omnicom CEO John Wren pose for photographers on the floor of the New York Stock Exchange a day after announcing that Omnicom Group and Publicis Groupe will merge to form the world's largest advertising holding company on July 29, 2013 in New York City. Assuming the deal is approved, the company will be called Publicis Omnicom Group and be led by both Wren and Levy.
Advertising has changed since the (fictional) days of Mad men.
"Using math to figure out where your audiences are and what they are and how to send specifically personalized messages to them," says Joseph Turow, at the University of Pennsylvania’s Annenberg School of Communication, " that’s the wave of the future."
That's the backdrop for today's news that Omnicom and Publicis -- already two of the world's biggest names in advertising -- are combining to become the biggest name in advertising.
The merged company, if approved, would create a $35 billion behemoth that represents rival brands like Apple and Samsung, Coke and Pepsi.
Those companies now demand better targeting of audiences and targeting requires big data, especially for digital advertising. Consulting firm eMarketer estimates digital ads make about 22 percent of current ad spending in the U.S., and expect that to rise to 27 percent by 2017.
Companies like Google and Facebook are collecting information on every digital move we make, and that's eating into the business of traditional ad agencies. Google, for instance, works with the big ad agencies -- but they also work directly with companies paying for the ads.
"These companies are having to justify their existence in terms of media buying against the powerhouses of the digital age," says Turow.
More money, and larger scale, will allow the old, merged ad giants to bolster their digital credentials, says Brian Wieser at Pivotal Research. Together, Publicis and Omnicom will also be able to invest in new marketing technologies on a vast scale that rivals competitors, he adds.
There's a sea of startups trying to develop new ways of parsing, selling and sharing data.
Whether the new Publicis-Omnicom wants to buy them out or hire their services, "they're much better positioned to pick winners and losers than was the case prior to this weekend," says Wieser.
That’s where Omnicon and Publicis see a future together: Investing in that technology and making it simpler for advertisers.
"Marketers face such a complex array of ad technologies and choices, its becoming a very confusing place to be a marketer," says Clark Fredericksen, vice president at eMarketer. "Further consolidation could potentially make it easier for them and that’s something that will benefit media companies."
Finally, by merging, Omnicom and Publicis can negotiate cheaper ad prices with media companies, which Pivotal Research's Brian Wieser predicts will have far-reaching implications for TV networks when they begin earning less revenue as a result, several years down the line.