PARIS: A PR subcommittee will be established to determine the future structure of the newly combined Publicis Omnicom Group's PR and communications agency brands and assets.
Publicis Groupe and Omnicom Group announced Sunday their plans to merge and form the world's largest marketing services firm - the resulting holding company will be known as Publicis Omnicom Group. Publicis' PR brands are MSLGroup and Kekst and Company; Omnicom owns PR brands including FleishmanHillard, Ketchum, Porter Novelli, Marina Maher Communications, and Cone Communications.
Olivier Fleurot, CEO of MSLGroup, told PRWeek a small group of high-level executives will look at every aspect of the Publicis Omnicom Group merger and company organization across all disciplines, including advertising, media, digital, and PR.
“Then, subcommittees will look at each discipline and how to make the best of what we now have together,” explained Fleurot. “Together with our soon-to-be sister agencies, we will share best practice and beat the competition.”
The subcommittees have not yet been created and the process will not start immediately due to the amount of regulatory approval the deal will require before it is ratified. All subcommittees will contain an equal number of people from each side of the merger.
However, Fleurot added that “we will be able to meet before the deal has closed and start exchanging information and thoughts.” He emphasized he had “no idea yet who will be on the subcommittee.”
“As far as I am concerned, I just want to contribute to it [the PR subcommittee],” said Fleurot. “For the future, I want to make sure the new Publicis Omnicom Group can lead in this area [PR]. I am excited by this new challenge, and very optimistic.”
Publicis Omnicom Group co-CEOs Maurice Levy and John Wren hope the deal will be ratified by the end of 2013/Q1 2014. The merger faces regulatory scrutiny in various countries, including the US and France, and is subject to shareholder votes, but Levy said the French government had been supportive of the proposed deal thus far.
“When the deal is finalized, we will be able to implement our plans pretty quickly,” said Fleurot. “I can't see any real obstacles on the regulatory and legal side.”
Martin Sorrell, CEO of WPP, told PRWeek via email he believes Publicis has done well out of the deal: “It's an extremely bold, brave, and surprising move. It's a great deal for Publicis, being a nil premium merger, and Maurice is to be congratulated. It does result in lower fast-growth market and lower digital proportions.”
“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,” added Sorrell. “Co-CEOs is not an easy structure. 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."
Fleurot sees no problem with the merging of two different cultures and said he was looking forward to working with his new “brothers and sisters.” “I know the key people in charge of Omnicom's PR agencies, and they are very good networks,” said Fleurot. “I am glad that I will have [PR] colleagues in the new group, as I have been on my own at Publicis up to now.”
Client conflicts have been raised as another potential problem for the combined group. For instance, PepsiCo is a major client of Omnicom, while Coca-Cola works with Publicis agencies. Other potential conflicts include AT&T and Verizon, Microsoft and Google, and Unilever and Procter & Gamble.
Richard Edelman, president and CEO of Edelman, believes this is one of the factors in favor of his firm's independent structure. “This enhances Edelman's point of difference over the rest of the market,” he said. “We are private, independent, and we're staying that way. Clients are interested in service and global scale [in regards to their agencies], but they are conscious of service first and Wall Street second.”
Representatives of FleishmanHillard declined to comment for this story and Porter Novelli referred enquiries to Omnicom at group level. Ketchum could not be reached for comment.
A spokeswoman for Omnicom said it was too early to go into detail on the specifics of what the deal would mean for the combined PR businesses, but noted the “increased scale and resources that would be offered by the deal across the board.”