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Reaction: SapientNitro, Essence, Brothers & Sisters, Iris and ISBA discuss what Publicis-Omnicom merger collapse means for independent agencies

May 9, 2014 | 5 min read

News broke last night that the $35bn merger between Publicis and Omincom - the subject of so much market speculation since its announcement last year - has been terminated.

Earlier today Publicis CEO Maurice Levy told journalists on a press call that he was disappointed with the turnout of what had seemed such a promising deal, and one that was necessary to achieve the necessary scale to compete in the increasingly big-data-driven environment.

Meanwhile Sir Martin Sorrell expressed his lack of surprise that the merger had collapsed, but predicted that more consolidation is on the horizon.

The Drum spoke to the market to see what the news could mean for the market and for independent agencies.

Malcolm Poynton, chief creative officer, Sapient Nitro

The collapse may just see us witness far more competitiveness between Publicis and Omnicom. They were aiming to do something together and it’s broken down through that journey, but they’ve both seen each others strengths and weaknesses. There’s a long way to go in terms of Omnicom being strong digitally and they’ve awoken Publicis up to that fact, and Publicis clocked how Omnicom ran a lower budget business that actually had a phenomenal success. What it also might have done is get other companies to think that something that big could be done. Everyone thought the Publicis-Omnicom merger was well…audacious, crazy and beyond everyone’s imagination. Those that come to mind are big companies like Accenture who clearly have an appetite for marketing services, so it might have triggered them to think it might not be so crazy to do a deal with a big holding company. Out of the chaos there was plenty of opportunity created. The chaos is not over yet in terms of the failed merger and yes, there is opportunity for independents and any other competitors because they’ve taken their eye off the ball to do a merger. And it will take a while for them to get their eye back on the ball.

Mark Syal, head of media, Essence

It's good that a decision has finally been made as there has been a lack of clarity. If it had gone ahead, the level of consolidation in the marketplace would have made it really hard for clients to choose with 70 per cent of all buying, depending on the country, being within those two units and with the trading desks behind them. You are choosing between two trading desks, which is a terrible thing for clients. As an independent agency, we are flexible and can take advantage of market conditions wherever they are. If it had gone ahead we would have benefited as we would have been on more pitch lists and we would have been an alternative point of view. We have heard how clients are frustrated by a lack of transparency, unwieldy processes and lack of innovation. We would benefit from being the guys who were doing exciting stuff. The scale that those two would have had would have been enormous and it's bad for the marketplace to have that consolidation there. We just have to be nimble and deal with the conditions, but we are of a size where that is possible.

Matt Charlton, CEO, Brothers and Sisters

From the point of view of independent's it's really good news because it breaks a growing trend. It proves that with all resources in the world advertising agencies are not ultimately about scale. They are about powerful and unique creative cultures that inspire three guys in room to start a business and persuade clients that they can solve their problems. It is still possible for an agency of 20 people to have a huge global account because smart clients value the right things. Quality not size. I hope this is the end of the arms race that has been escalating in the industry.

Ian Millner, global CEO, Iris

Our industry is destined to form, fragment, rebrand and reposition. So I think that generally this will neither strengthen nor benefit the independent sector – especially as most people had parked the merger in a relatively low interest 'believe it when we see it' box.The only knock-on impact that I would expect to see is an increase in both network's appetite for 'client optimization'. The other thing that I would expect is more 'acquisitive' behavior as both networks try to stoke the momentum of growth.

Ian Twinn, ISBA, director of public affairs

When news of the potential mega-merger surfaced last year it raised client concerns about market dominance, with the impact that POG’s increased power might have on many advertisers as their primary route to media. We also raised concerns that the merger would inevitably lead to some significant rival client conflicts, a concern which at the time seemed to be unavoidable. ISBA only speaks for UK advertisers, of course, but given the ‘challenges’ alluded to in the joint statement, it is looking more and more like this merger was always going to be an unlikely one. We believe many advertisers will be relieved that both groups have, through mutual agreement, taken into account the potential impact that the merger would have had on their clients and the market.

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