These Are Biggest Client Conflicts Created By The Most Massive Ad Company Merger Ever
But after holding companies Omnicom and Publicis announced its surprise merger Sunday, making it the biggest ad entity in the world, the world couldn't help but notice that huge nemeses had overnight become part of the same family. Pepsi and Coke. AT&T and Verizon. Apple and Google.
Omnicom CEO John Wren adamantly stated that he was not concerned about conflicts of interest.
"We're going to work extremely hard with our clients over problems and try to come up with creative solutions," he said."But at this point, if the deal is completed, there is — I don't believe, a significant client ... no single client would be significant enough to disturb the deal."
As holding companies have gotten bigger, and conflicts more common, they have come up with creative ways to retain conflicted business. Accounts can be split by geography or by agency, with "firewalls" between them. It's up to the client to trust that the splits are done in good faith, however.
According to the Wall Street Journal, "One analyst said he has heard several times from executives, generally, that if two top ad agencies combined they should expect to lose about 8% to 10% of combined revenues because of conflict clients." Wren thinks the biggest loss would be 1% of revenues.
Since some huge companies with boatloads of different products, like Procter & Gamble, already had different goods living in both Publicis and Omnicom, the merger won't be dramatic for some major clients. But for companies that don't like competition — S.C. Johnson historically hates conflict — the partnership could be problematic.
Here are some of the biggest conflicts:
SODA
- Coca-Cola (Publicis' Leo Burnett) vs. PepsiCo. (Omnicom's TBWA)
Pepsi's entire ad campaign in the 1970's and 80's revolved around the Pepsi Challenge, which had a sole purpose of proving that consumers liked drinking Pepsi more than Coke. The fact that the two rivals will now be living under the same roof is by far the biggest conflict created by the merger.
Ad Age wonders if WPP and Interpublic, two separate holding companies that have both worked with Coca-Cola, might have the ability to steal away the soda.
WIRELESS PROVIDERS
- AT&T (Omnicom) vs. Verizon (Publicis)
In fact, almost every telecom company (AT&T, Sprint, T-Mobile, Verizon) will now be under Publicis Omnicom Goupe's creative control if no one moves.
TECHNOLOGY
- Apple and Microsoft (Omnicom) vs. Samsung and Google (Publicis)
BEER
- MillerCoors's Miller Light (Publicis' Saatchi & Saatchi) vs. Anheuser-Busch's Bud Light (Omnicom's BBDO)
A-B InBev, however, isn't concerned and has different labels with each holding company. "It doesn't change anything related to agency conflict," VP of marketing Paul Chibe told Ad Age in an email. "The holding-company approach is to have different network shops to manage potential conflicts. That doesn't change in the event of a merger. We work with Publicis and Omnicom agencies in many countries."
AUTOMOBILES
- There's a lot of car overlap between the company, although the divergences could still result in conflict. Nissan, General Motors, Toyota, and Volkswagen all have business in both holding companies, Ad Age reports.
A Nissan spokesperson told Reuters, "Renault and Nissan are both major global clients of both Publicis and Omnicom. We welcome the direction taken by Publicis and Omnicom to create a best-in-class communications, advertising, marketing and digital services company and will continue to work with them."
BMW sales chief Ian Robertson, on the other hand, was less optimistic. "Ideally, clearly we (would) have that independence from other manufacturers," he said. "But in a world which is now connected and there are so many mergers of this type, maybe that's something that is not an ideal position."