The vast majority of mergers fail to achieve either their financial or operational goals. Period. Even when the stars are aligned. Which in this case, it became increasingly clear, they were not.
There were so many plausible reasons for this deal to crater that it is difficult to pick just one out of the rubble.Clashing CEO egos (who's going to be in charge), tax issues, client defections, employee dissatisfaction, clashing CEO egos...
They made a brave attempt at putting lipstick on the pig, but too many people thought this was driven by numbers that had a lot to do with finance and nothing to do with the actual business of creating and selling advertising. Here's some free advice: when a transaction is really about something other than the core delivery of service to clients, it's time to 're-imagine' the deal. JL
Jonathan Baskin comments in Forbes:
The merits of pooling data on consumers was a key driver for the merger, as it would help the new company better predict behaviors, and compete with Google and Facebook. That logic reminded me of the nonsense blather about Internet synergies that excused the AOL and Time Warner merger. And we know how that turned out.
It might be entertaining to ponder the possibility that the $35 billion Publicis and Omnicom merger failed because the executives couldn’t agree on who would be in charge, but whatever the cause, the outcome is great news for the rest of the staffers who were and would be impacted, their clients, and the ad industry at large.
First off, most mergers never work, and none of them work as well as planned. There’s an inverse relationship between how great big deals look on spreadsheets, and what they end up looking like in the real world. The data and the deal are two different things, yet the financiers who argue the former are rarely held accountable for the disappointments of the latter. Publicis and Omnicom simply may have dodged a huge, thorny bullet.
That collective sigh of relief must be loudest among its staffers and clients. There’d already been account defections, and you could imagine the nightmare they were living (and would face for years) of trying to reconcile business structures based in large part on personalities and relationships.
Also, just like the gap between data and deal, the ad business in particular suffers a dissonance between finance and function, in that the financial rationale for mergers in that industry – combining media buys to get better placement and rates, and doing the same with back office functions – rarely has anything to do with the actual practice of creating advertising. A conglomerate of ad agencies and marketing services doesn’t necessarily empower its constituent parts to deliver better work, but rather makes sure the work is profitable. The merged company may have been more efficient, one day, but it had no obvious plan to be a better one.
Unless, of course, big data changed the game. The potential merits of pooling data on consumers was credited as a key driver for the merger, as it would help the new company better predict behaviors, and thereby compete with Google and Facebook. That logic reminded me of the nonsense blather about Internet synergies that excused the AOL and Time Warner merger a while ago. And we know how that turned out.All data yield insights, but not all insights are based on data. This is a fact of history and unimpeachable quality of the human condition. So the very idea that Publicis or Omnicom “compete” with Internet search or social media platforms is fundamentally flawed. Worse, it predetermines certain solutions, all of which come from the imagination of people who have never advertised or sold a thing in their lives (other than the promise of their own inventions), and none of which acknowledge the true purpose and strength of advertising (and marketing overall).
There’s another gap at play here, this time between what data can predict, and the vagaries of science and culture that make human desires and actions unpredictable. We can always improve how well we see these drivers, but we’ll never command them. Ad people have always known this, and it’s in this space that advertising used to thrive.
Belief and motivation rely on truth, integrity, meaning, utility, motivation and other qualities that can be indirectly measured with data, but not replaced by it. Clients and consumers need agencies to stand for these drivers of experience, and not try to parrot the sales pitches of technologists who don’t understand or appreciate them. Maybe it’s time to stop apologizing for advertising’s shortcomings, and figure out how to once again deliver and sell to its strengths?
While the reasons for the Publicis Omnicom merger and its failure had nothing to do with creating better advertising, it could be a prompt to do so now, which would be great news, indeed.
