Publicis and Omnicom merger 'unlikely' to prompt short-term PR shake-up

Advertising rather than PR is likely to be hit first by cost savings following the Publicis and Omnicom deal, it has been claimed.

Joint CEOs: Publicis' Maurice Levy (l) and Omnicom's John Wren will be co-CEOs of Publicis Omnicom Group
Joint CEOs: Publicis' Maurice Levy (l) and Omnicom's John Wren will be co-CEOs of Publicis Omnicom Group

Yesterday the two holding groups announced a tie-up, set to knock Sir Martin Sorrell’s WPP off the top spot as the world’s biggest advertising agency, with combined revenues of $23bn.

The merger will bring together Publicis’ MSL Group and Publicis Consultants with an Omnicom PR stable that includes Fishburn Hedges, FleishmanHillard, Porter Novelli, Ketchum and Portland.

However, despite French group Publicis stating the deal would create ‘significant value for shareholders’, with expected synergies of £325m, one M&A expert expected advertising to take the initial brunt of savings.

Rupert Ashe, director of D5 Capital, said that PR’s position ‘further down the food chain’ would help it.

‘Any savings are likely to focus on the bigger advertising end of the spectrum, and it’s unlikely they will want to start mixing the major PR brands within the groups early on.’

The new group will be jointly led by John Wren, CEO of US-based Omnicom, and Maurice Lévy, CEO of Publicis, as co-CEOs.

It has been reported that between them, Publicis – which includes Saatchi & Saatchi – and Omnicom control 41 per cent of global advertising spend.  

Despite anticipating WPP would respond, naming Havas and Interpublic as likely targets, Ashe predicted that the major deal would be lead to a ‘pause for breath’ in M&A activity across the PR market in the short term.

Trevor Morris, University of Westminster visiting professor of PR and former CEO of Chime Group, agreed.

He said: ‘This major deal does mean there will be fewer moves in the short term to buy emerging firms, which could depress prices.’

However, Lansons Communications founder Tony Langham claimed that PR agencies were not necessarily safe from cost-cutting.

‘There will be a lot of nervous senior UK PR folk this morning as rationalisation at senior level is inevitable,’ he warned.

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