Procurement Perspectives on the Omnicom/Publicis Merger: Expert Interview (Part 1)

The potential for an Omnicom/Publicis combination is setting the advertising and marketing world ablaze with discussions around the future of the profession, providers, and industry overall – spanning agencies, networks, analytics, and even the balance of power between media outlets and advertising buyers. For Spend Matters’ initial coverage of the combination and what it means, see Omnicom and Publicis Groupe Merger: Advertising Spend Advice.

Spend Matters recently had the chance to catch up with Procurian’s Brad DeHart, who serves as Global Marketing Practice Lead for the procurement services provider. We were curious to gain Brad’s perspective on the transaction from both a procurement / advertising buying and overall industry perspective. Below, we feature the start of interview (check back later this week for the rest of the discussion).

Spend Matters: What are the two or three things procurement should keep in mind most regarding the merger?

Brad DeHart: I think what is truly top of mind for stakeholders and agency relationships is to help revisit and consider the implications of the merger relative to competitive conflicts. Some of the obvious competitive conflicts such PepsiCo and Coke come to mind and have been covered in the media already. Essentially, depending on an advertiser’s conflicts policy, many of the combined networks’ agencies will likely have competitive conflicts. This will put a strain of marketers based on historic conflict approaches. It’s a risk management question, and procurement should work with marketing and their agency partners to create an approach to work through it, as the concept of such a large network and agency holding company is going require more conservative advertisers to rethink their definitions of competitive conflicts.

I think the next topic for procurement is that folks who help their team with marketing spend and agency relations should really counsel their internal customers to take a conservative –as in patient – view of the potential transaction versus somehow trying to get into the weeds now and leverage the transactions for their own gain. In other words, we should temper expectations in the near-term rather than move quickly on any type of activity as a result of the announced deal. The reality is that it will be a lumbering, slow-moving process, subject to regulatory hurdles.

The networks will also have their hands full in the short term. It is our job as advocates for the business to not allow our internal clients to get caught up in it. It's a misplaced effort – they should sit tight and let the chips settle. For now, I think advertisers should really step back and assess how many agencies are now in the combined Publicis Omnicom network. For some advertising buyers, it could be that a good portion of relationships are in the newly formed network already. On a more long term basis, these advertisers that find themselves working with a good portion of this new entity, can evaluate whether a network relationship should be formalized. From a strategy standpoint, they might want to consider this down the road (i.e., setting up a network relationship and leveraging it). In short, I’m suggesting that advertiser/marketing procurement teams could find themselves with a consolidated view and might want to proactively move to this after carefully weighing the pros/cons.

Spend Matters: What is a “network” agency model?

Brad DeHart: If we step back for a minute, what I mean by having a network relationship is instead of having all of the individual agency and firm relationships, you specifically work across the holding company member firms (e.g., digital, media buying, etc.). You would still have annual performance metrics, plans, KPIs with firms. But instead of individual T&Cs and other commercial terms with multiple entities, you have a chance to build an umbrella relationship, a single agreement.

This can provide leverage to gain greater value for the advertiser including better service. It can also streamline the commercial engagement process with new agencies that fall under this network. Usually when advertisers look at network options, they're skeptical. The common perspective on networks is that they're not as integrated as they claim. However, there are reasons for that and some of the network relationships and promises have been hollow in the past. Going forward, however, I think there will be much more of an onus on the combined entity for its leaders to follow through on that promise of what a networked model can bring. What is undeniable is that given the number of agencies across all areas that will be in this network, it will be less of a compromise for advertisers to enter into such a relationship with Publicis Omnicom. The combined POG offering is strong across all areas and really has no weaknesses that I can see. 

Stay tuned as our interview and discussion with Procurian continues. 

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