Early warning for media owners after Publicis and Omnicom announce merger
The Publicis and Omnicom merger will have negative implications on media owners whose revenue base is skewed towards advertising and especially those whose advertiser base skews towards large brands, according to analysis from the Pivotal Research Group.
“The impact of the transaction on the media industry will likely be profound in ways that many observers have not fully considered as of yet,” said Brian Wieser, senior research analyst at Pivotal Research on Monday.
“This is because of the ways in which we think the entity may change its media buying practices and the follow-on impact on the rest of the eco-system.”
Wieser says the timing of such changes would not be imminent, and may not be evident for several years if they occur. However, the surprising merger means that a “wide range of consequences” should be newly considered when assessing terminal growth rates and risks for media owners with skews towards advertising and the large brands serviced by holding companies including CBS, Discovery, AOL and Yahoo.
Most of these considerations, Wieser says, will be “incrementally negative”.
“It’s also worth noting that the combined entities will now also be better positioned to pick winners and losers in ad tech,” Wieser concludes.
“Between Publicis Omnicom Groupe and WPP, the two entities will have a disproportionate degree of influence in picking winning technologies in ad tech – platforms such as DSPs, bid management systems, book-bill pay systems, etc – will all now have two big customers accounting for the bulk of activity in some verticals, making a shake-out more likely.”