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Digital Marketing Shapes Business World

Proposed Omnicom-Publicis Merger Underscores Undercurrent

Whether you know it or not, chances are you grew up on commercials made by Omnicom. The advertising giant has spearheaded campaigns for Sara Lee, Pepsi, Pizza Hut, Clorox and Nissan among dozens of other huge-scale brands. Omnicom has become one of the most successful ad companies out there — and it’s now looking to merge with one of its rivals.

Omnicom and European competitor Publicis have announced their intention to merge into a single company, which has set the business world abuzz. A number of commentators have wondered what motivates the merger: It doesn’t come with any immediate cost benefit to the companies’ clients and it doesn’t reposition them in any clear way. In fact, both companies are on top of their game – not the usual time to merge with a competitor.

But while both Publicis and Omnicom are at the top of the traditional print-radio-TV advertising market, the truth is that market is becoming something of a dinosaur. There’s no doubt that traditional media channels still deliver consumers and leads, especially prime-time TV slots – but not nearly as much as they used to, and the demographics who favor those channels are dwindling.

Internet, as they say, killed the video star.

Not that either all-star firm is a stranger to online marketing. Both have reached out into the digital universe, particularly by mining online user data to boost profit margins for ad clients. Publicis in particular has led the charge and makes one-third of its revenue from digital marketing in some form or another – the highest in its industry.

But mining data and buying small tech firms is not the same thing as dominating an Internet-centric ad market. That market has not eluded companies like Omnicom and Publicis, but it was off their radar for too long. It’s a world dominated by purely web-focused firms like Google.

Of course, just because the companies have announced their nuptials doesn’t mean regulators will let it happen. There is legitimacy for an antitrust objection to the merger, and particularly in Europe regulators have leaned toward viewing traditional media mergers as potential monopolies, Internet markets be damned. But the companies’ official reasoning is simple (and telling): massive web giants like Google, Twitter and Facebook are too big for either company to compete with on their own.

In other words, they are not two top-of-their-game champions looking to monopolize an old market – they’re two newbie underdogs at the bottom of a new one.

Video stars, indeed.

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