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 29 July in New York City. Photo: AFP
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 29 July in New York City. Photo: AFP

Publicis-Omnicom may take time to overtake WPP India’s annual revenue

Merger, however, will create an ad conglomerate with `
1,100 crore revenues in India, say experts

New Delhi: The merger of Publicis Groupe SA and Omnicom Group Inc. may have pushed Martin Sorrell’s WPP Plc. to second spot in the global ranking of advertising and marketing services conglomerates but it will be a while—if that—before the combined Publicis Omnicom Group in India overtake’s WPP India’s estimated 1,800 crore in annual revenue.

Still, the merger will create a 1,100 crore by revenue conglomerate in India that manages brands such as Coca-Cola, Pepsi, McDonald’s, Adidas and Aircel as clients, and boasts an array of top talent such as Jasmin Sohrabji, Satyajit Sen, Arvind Sharma, Madhukar Kamath and Bobby Pawar. The merger announced in Paris on Sunday will need to get regulatory clearance.

Neither grouping announces revenue in India and the numbers presented above are estimates arrived at by speaking to several advertising executives.

In India, the Publicis Omnicom Group includes media, creative, digital and public relations agencies such as BBDO, Saatchi and Saatchi, DDB, Leo Burnett, TBWA, Razorfish, Publicis Worldwide, FleishmanHillard, Digitas, Ketchum, Starcom MediaVest, OMD, BBH, Interbrand, MSLGROUP, Publicis Healthcare Communications Group (PHCG) and ZenithOptimedia, among others.

An advertising executive who did not wish to be identified said the merger would have a significant impact on the Indian digital marketing ecosystem. “Individually, the two groups are very strong in digital. Their combined digital power will be huge," added this person. Indeed, in the past year and half, Publicis has acquired five digital agencies.

“The Publicis OmnicomGroup is planning to scale investment, focus and development towards its digital offerings in the future. While advertising as we know it will continue to exist, digital (advertising) is going to be huge and is evolving rapidly," said Arvind Sharma, chairman and chief executive (India sub continent), Leo Burnett, which is part of the Publicis Groupe.

“Scale is important here for development of new products and services. Bigger scale resulting from this merger puts all industry networks in a much stronger position, because it will allow big investments and stronger access to alliances and partnerships with players like Google, Facebook and their equivalents tomorrow," said.

“The merger will foster growth," said Madhukar Kamath, group chief executive and managing director, DDB Mudra, a wholly-owned media and advertising agency part of the Omnicom Group Inc.

Publicis Groupe acquired Indigo Consulting (April 2012), Resultrix (August 2012), iStrat and MarketGate (December 2012), and Convonix (March) —all aimed at improving its digital footprint in India.

Still, the space remains fragmented with “clients demanding specialized agencies" according to Atul Hegde, CEO, digital marketing firm Ignitee India Pvt. Ltd, and “unless they (Omnicom and Publicis) create an integrated single buying ethos they will not be able to seek large consolidation in this space," said Manish Vij, founder, Smile Vun Group, another digital media agency.

The online advertising market in India is estimated at 2,260 crore and is growing at 30% according to the Internet and Mobile Association of India (IAMAI). That apart, digital agencies, which have mushroomed across India, also render services such as social media marketing and analytics to clients. Ad spending on social media went up from 94 crore in FY2012 to 300 crore in FY2013, according to IAMAI.

Commenting on the merger’s implications for his business in India, Sorrell reiterated what he told global media soon after the deal.

“It’s an extremely bold, brave and surprising move. It’s a great deal for Publicis, being a nil premium merger... Time will tell if the cultures will click and whether clients and talent benefit—and how $500 million of synergies will be generated without job cuts," he said. “Further consolidation in our industry was inevitable as we have said on many occasions. An equilibrium may be starting to be established, which will generate further significant opportunities for WPP organically."

“While the Publicis Omnicom entity in India will have some catching up to do with WPP, the merger will help them in terms of increased synergies, cost saving, and higher market cap," said Sam Balsara, chairman and managing director, Madison World, India’s largest homegrown communications agency.

Ranjan Kapur, country head, WPP, and Josy Paul, chairman, BBDO, declined to comment for the story.

Suneera Tandon in New Delhi contributed to this story.

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