A merger of Omnicom Group and Publicis Groupe, the announcement of which is expected tomorrow, would result in a sprawling array of media agencies -- and digital agencies that buy media -- under one corporate roof.
Omnicom's big media agency brands are PHD, OMD, and Resolution Media. The Publicis side is sprawl-ier, consisting of Starcom Mediavest Group, Digitas-LBi, MRY, Razorfish, and Performics.
Serving these companies on the programmatic front are two trading desk units – Omnicom's Accuen and Publicis's Vivaki AOD. Assuming the deal meets approval from the U.S. and French regulators, the two will face decisions about how – or whether – to integrate.
A merger has already been approved by both company's boards, The Wall Street Journal has reported (Bloomberg had the story first). Publicis will host a press conference in Paris tomorrow morning to discuss a "major announcement," in which details may come to light about the companies' shared digital media resources. Until then we're left to speculate what could happen to their respective programmatic buying units.
There are two or three possible outcomes for Accuen and AOD. A "Publicis Omnicom Groupe" could, straight-forwardly, keep one and shutter the other. Or it could keep one and spin off the other, as private equity investors are rumored to have coaxed Interpublic Group to last year when the fate of Mediabrands Audience Platform/Cadreon hung in the balance (It has since been folded into Magna Global). In either of those events, AOD may have the best odds for internal survival since Publicis is the larger of the two entities.
The third scenario, and probably more likely, is that Accuen and AOD would be merged in some way, since existing agency and client contracts must continue to be serviced. What would that look like?
Accuen, run by Josh Jacobs, has 200 staffers, and Vivaki AOD, helmed by Managing Director Chris Paul and Vivaki President Kurt Unkel, employs 225. Unkel recently said that last year's gross media spend was $200 million, and growth this year has been about 115%. Put those activities together and you have a trading desk unit with a headcount of 425 and tentacles reaching upwards of eight agency brands.
That's larger -- in terms of payroll at least -- than WPP Group's Xaxis, heretofore the 800-pound gorilla in the space, which employs 300 and has annual billings of $400 million. Since Omnicom has not disclosed revenue we don't know whether Xaxis or a combined AOD/Accuen is doing more in billings. Also, it should be mentioned the headcount numbers can be fudged to some extent, since trading desks increasingly share resources with their agency partners.
In some respects Accuen is ahead, despite its smaller size. It has, for instance, made more progress than AOD at embedding within agencies -- a key trend in the trading desk arena and an answer to widespread client concerns about undisclosed arbitrage and the lack of transparency. Last month in Cannes, Unkel said, "Everyone is based in an office space I pay for." By contrast Accuen's Jacobs said at the same event, "One hundred percent of our US business is serviced by people who are sitting in-office at the media agency."
The general rule at most trading desks today is, ad operations are centralized and account teams are embedded. It may be that Accuens and AOD's existing account teams remain in place, while ad ops teams find some of their positions are "made redundant."
There are other differences in approaches, and some commonalities. Accuen prides itself on its analytics chops and its DSP agnosticism (AOD was until recently largely dependent on Google's DoubleClick Bid Manager, a strategic error in light of the Facebook Exchange), and both companies boast significant local market flexibility.
According to Jacobs, "We're seeing a tremendous amount of individual countries that have really vibrant technology systems." Both companies say they are strong in Northern Europe -- Accuen in the Netherlands and AOD, no surprise, in France.
Can they combine the best of all these worlds? Time will tell. Meanwhile a key challenge for Jacobs and Unkel/Paul will be to retain talent in the midst of the bureaucratic and political drudgery that accompany any big integration project. As we detailed last week, Publicis has struggled to hold onto CEOs at its key digital agencies. For the best and brightest at both Accuen and AOD, there will be no shortage of offers in the startup world.