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Dan Brainstorm1950s

My Thoughts on the Publicis/Omnicom Merger

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I congratulate Maurice Levy and John Wren, both friends and worthy competitors, on the bold merger of their companies. I have several thoughts on the historic merger of Publicis and Omnicom.

First and foremost, I am not afraid. You should not be either. Bigger does not mean better. My 84-year-old mother’s first reaction yesterday was that this reminds her of AOL’s* merger with Time Warner. “They were all screwed up for years,” she said.

Second, you can expect all sorts of efforts to squeeze costs as Wall Street will be pressing for efficiencies. The rationale for bank mergers was always the elimination of back office staff or the combination of units that are too small to achieve scale. The two CEOs yesterday said that there will be $500 million in cost savings. The smaller PR firms within either holding company should expect to be merged. Note that Omnicom has done this before with Ketchum and Pleon or Gavin Anderson and Kreab. PR will not be a focus area; it will be part of the supporting cast.

Third, the big data play is real. But so is the small data play. That is our way of upsetting the giants. We will focus on the new influencers, the inverted pyramid of community in which thought starters and amplifiers are leading the conversation. We will have special insights through our Edelman Berland dashboard coming end of September. Someday this is going to be the big play for research-driven public relations.

Fourth, the merger underlines the importance of digital. We are already doing 20 percent of our business in the U.S. and UK in this area, with a commitment to build the same capability in other markets. We have a different approach to digital, which is social digital tied to public relations. Social is a powerful adjunct to data because you cannot control conversations.

Fifth, the media companies are attempting to circumvent the ad agencies in going direct to clients. Note the comment by The Weather Channel CEO David Kenny (former CEO of Digitas and top executive at Publicis) in The New York Times to that effect. We have to be the “smart money” partners with media companies in approaching clients with good ideas that can move from sponsored content into earned media. We understand the context, the news value and the ability to create a movement.

Sixth, these are both mature businesses. The growth rate for Omnicom in the first quarter was two percent, the organic growth rate for Publicis even lower. There are no more consolidation plays by diversifying into adjacent areas; the roll-up phase is over. The advertising operations in the U.S. and Europe will be the cash cows for the enterprise. There will not be an evolution of the classic ad agencies into digital plays (the former strategy of Omnicom).

Seventh, the best people will want to work for a firm at which they can be entrepreneurial and creative. It is a great time for talent to migrate to a firm dedicated to client service, integrity, long-term relationships and big ideas.

We have the correct strategy, a global enterprise with local roots, a public relations firm with deep expertise in marketing and corporate/public affairs, powered by specialist skills in digital and research. We are built to last, with a conservative balance sheet and ability to invest in new ventures. We hire and attract the best talent and allow them to be entrepreneurial, to push the envelope and to not be afraid to fail. We are a private family-owned enterprise—now and forever.

It is fitting that my family gathers today at my father’s grave site to unveil his headstone. Union General Joshua Lawrence Chamberlain at the dedication of a monument to his regiment, the 20th Maine, at the Gettysburg battlefield, said, “In great deeds something abides, on great fields, something stays. Forms change and pass but spirits linger.” The soul of this firm is Dan Edelman, decent, determined, an iconoclast to the end. His vision remains a lasting one and it is the reason in the face of the weekend’s news that I’m confident we will continue to be successful.

*Edelman Client

Richard Edelman is president and CEO.

  • Richard Mahony

    Well said, Richard. Some mergers mark the start of a significant new trend, while others, like this one, mark the end. It’s great to have competitors distracted by a big merger and a dual CEO structure.

  • billinboston

    This looks like one of those mergers where 1+1 equals 1-1/2 — subtraction by addition as they say.

  • Giles Palmer

    your mother is certainly on the ball!

  • Starr Lycos McCaffery

    Well said indeed, Richard. When I left Edelman a dozen years ago and went to an Omnicom PR firm, it was the first time in my career not working for an independent firm and, yes, PR did seem to be an afterthought in our “integrated” offerings. In my years with Edelman and other independents before it, PR was a true partner at the table with other marketing/communications firms. There is a clear advantage to independence for clients who truly want what PR can deliver. If ever I return to agency life you know which doors I’ll be knocking. My thoughts are with you and the family today at Dan’s gravesite.

  • http://www.FetchFans.com Carmen Benitez

    Do you believe this is and/or will be a case of profitless prosperity, Richard?

  • philbutler

    As is always the case in your writing Richard, this piece mirrors your hard work, brilliance in understanding your craft, your family’s legacy, and a bit of Daniel Edelman too – as is natural no matter who’s family we are focused on.

    While I would not ever, ever presume to offer clarification, I expect even Napoleon’s soldiers uttered opinions and warnings to the great strategist. Surely Bill in Boston’s comment cements the prospectus for this new organization 1 + 1 = 1 and a half boils this move down to it’s apparent purpose – an incremental market influence move.

    However confident and righteously condemning we may be of the sluggish corporate snail though, underestimating rivals has its ages old harbingers. As you so aptly point out though, the great weakness we can perceive here is PR as a subset of communicative effort. One can argue that if ads take over, the conversation becomes one sided. For my part, in doing communication as an intermediary, talking to huge entities is often akin to screaming into Carlsbad Caverns.

    This leads me to a good point, I think. Thinking of “social” as a corollary to data (big or small) is for us down here chattering, the cart before the horse. The conversation and the convergence of which we speak is not controlled by gleaned data and the machinations of advertising moguls – not yet anyway. This symbiotic relationship, if led by either pole, is being powered by customers – here Edelman and the Admen are reacting instead of shaping (just now) this shift.

    This is not to say the expert voices of Edelman are have failed to grasp this tiger by the tail, nothing could be farther from the truth. But, all of us learn, grow, and hopefully, eventually become even greater persons and organizations.

    When the greatest voices in public relations speak, people should consider it a calling. A calling not for gratuitous coddling, but to elevate thought and ideas that spring from them. Will Fleishman Hillard and Ketchum evaporate like some sinister harbingers of denouement? Certainly not. In reality the actions of Publicis slash Ombicom have now provoked the next iteration of Edelman PR.

    I have absolutely zero doubt but that the company Daniel Edelman forged will surpass what previously was accomplished, probably what any of us imagined as communications transformation. Miscalculations and all.

    Always,
    Phil

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