Every high schooler can recite Newton’s third law of motion: “For every action there is an equal and opposite reaction.”
But it’s a rule that applies far beyond physics classrooms. In the advertising world, an attempt at an equal and opposite reaction to this past summer’s mega-merger of Omnicom Group and Publicis Groupe, now Publicis-Omnicom and the world’s largest advertising agency, is already under way.
Like the Alliance of Small Island States or any “big guy versus little guy” organization, several small to mid-sized advertising agencies including Chi & Partners, its media operation M Six, customer relationship shop Rapier, PR agency Halpern and social shop The Social Practice have begun to push back by creating their own joint holding company called The & Partnership, according to AdAge.
Headed by Chi & Partners CEO Johnny Hornby with a North American arm run by Proximity CEO Andrew Bailey (formerly of Proximity Worldwide, an Omnicom company), the new conglomerate is a recognition that small and medium-sized advertising agencies risk losing clients and being squeezed out of the market as mega mergers like Publicis-Omnicom become more common. In reaction, small agencies are fighting fire with fire.
But are mid-sized mergers really the right solution?
Media analyst and blogger Don Cole doesn’t think so and I agree to an extent. He fears that small to mid-sized agencies won’t have the staffing, creative talent and big data resources to be truly appealing to larger (and more profitable) clients. In the end, mid-sized mergers are like pooling the skills of several minor league baseball teams. More players don’t mean more capabilities. If anything, he cautions, cost cutting (read: layoffs) will be first on their agenda. In this scenario, the Goliath that Publicis-Omnicom has become (and the others that follow) wins out over the smaller Davids.
So if mini mergers aren’t the solution, what is? It’s not as black and white as Don Coles sees it. To return to my baseball analogy, not all minor league players stay minor league forever. Some do make it to the majors. And “making it to the majors” is what all advertising and PR agencies aspire to achieve. While one route to that success is, of course, growing large (and influential) enough to be bought by a conglomerate such as Publicis-Omnicom, another way is to continuously recruit new, young talent and also become expert in specific niche communication fields. That’s what we’re doing at ThinkInk.
It’s important to remember that smaller agencies aren’t devoid of assets. At smaller shops there is often less process, less bureaucracy and less confusion over who has the authority to do what. Small agencies are nimble and can better respond to client crises, when they inevitably occur.
As for The & Partnership, you can be bet adland will be watching its success or failure as closely as it’s watching Publicis-Omnicom. The David and Goliath ad agency battle is just heating up and it’s anyone’s guess which side will win.