Publicis, Omnicom And The Marketer's Frustration: Intuit's Cezanne Huq

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What does the marketer really think about the Omnicom-Publicis marriage?

Intuit’s Head of Online Acquisition, Cezanne Huq, shared his thoughts on the merger, which is partially informed by his own company’s agency services needs as well as his background in the services world.   Though he declines to say exactly which agencies Intuit works with today for competitive reasons, Huq says that none come from the “holding company mix.”

In our discussion, Huq emphasized the opinions are his own and not those of Intuit.

AdExchanger: What’s your "take" on the merger from your marketer point-of-view?

CEZANNE HUQ:  The way I'm thinking about the merger is in three ways: the effect on a) employees, b) customers and c) shareholders. First, my point-of-view is that the merger heralds an end of an era, and that era is “the agency era.” Now, I'm not saying that we (marketers) dislike agencies, or that agencies are not going to play an important role in the future, but I think the signs are pretty clear in terms of how the market is going.

First point - Employees. [Omnicom CEO John] Wren and [Publicis CEO Maurice] Lévy already admitted that they're going to create about half a billion in efficiencies. That's great. Of course, you know what's going to come out at the other end of that equation and that has to do with the impact on employees.

Part of the issue with agencies is that there is a revolving door at the mid-tier levels of the holding companies. Also, generally speaking, when two companies as big as these decide to come together, they must have completely exhausted their R&D efforts and see M&A as a last ditch effort.

Regarding the revolving door mentality, many terrific agencies started out with the promise of delivering on exceptional creative businesses or distribution.  But, the fact is that the folks at the holding companies who are making these merger decisions don't really know what's going on in the belly of the beasts, if you will - the two beasts.

When you say revolving door, there's a lot of turnover at agencies?

Yes, there is a ton of turnover.  As you know, 50% of my career has been spent in the agency world and working within the agency side. I’ve also been on the in-house client side which is where I am now. The amount of turnover that ultimately affects a client relationship is almost as shocking as it is unfortunate. I don't believe that it's necessarily the fault of the executives, to be honest. I just don't think that John Wren, Maurice Lévy and their key executives understand the top-down impact that affects the relationship vis-à-vis employees.  When they say “stakeholders,” they're talking about shareholders, first and foremost.  And, then they talk about clients and they barely discuss employees and the mood and mentality all of this creates.

The reality is that the merger is going to create a right-sizing. We know that, it’s quantified as half a billion in efficiencies. There's going to be a lot people doing the same work, same duties and they are going to figure out how to shave that inefficiency out because endemically a merger creates that, that’s what it’s supposed to do. That's one thing. However, the real impact is that it only inhibits the employee mood and motivation to do great work.

We know that the bulk of the high margin business is particularly driven by creative work, the crazy great ideas that emanate from these terrific boutique agencies - and even some of the larger ones. I think that's going to be potentially something to keep a watch out for.

Now, on the client side, I think Interpublic Group and WPP Group are going to win big time. You take a client such as Coke, and some other brand in the beverages vertical, you’ll see a lot of conflict of interest and the agency’s  solution will be to create a Chinese firewall. That's the logistical side of solving the competitive equation for now. And optically, that’ll work for a while.

However, the fact is that this merger opens up an opportunity for brands to rethink and reconsider the agency relationship and I think that that will culminate in a series of calibrations, coming from Coke, Pepsi and even other vertical clientele that these two holding companies have. There's a ton of duplication.

Now, I'm not saying that they haven't figured this out beforehand, but the fact is there are too many unforeseen circumstances ahead and, right now, all I see is “cloud level” discussions from executives. There's also a generational gap playing into this.

Finally, regarding the shareholder side, there is going to be a boon in the short term, but in the long term, you're going to have a lot of downward pressure as a result of the issues I’ve mentioned before. And, the market is changing pretty drastically, so that by the time they think about the logistics and mechanics of getting the merger right - whatever that may mean - I believe programmatic marketing will be way further along than where it is right now. We're already seeing market growth in advertising being driven by a programmatic mindset.

That mindset is driving more ad technology growth versus your traditional agency advertising growth. For the agency, what's left is really the creative side.

All of the fundamentals of managing media - even TV, look at digital TV, VOD - these are all going to facilitate more programmatic buying.   I'm not saying traditional TV is going to go away but the scope and addressable market for the agencies is going to be small in the very near future.

As a result, it's going to be a race to the bottom. The only way you're going to do that at-scale is, of course, through programmatic buying.

Today, the power shift is moving over to Google, Facebook, ad tech and AppNexus-type technology providers.  I think the merger boils down to an end of an era.

What's the biggest pain point of all for you regarding this merger?

End-to-end marketing effectiveness is essentially going to be the biggest sufferer in this merger because what happens, even now, is the ecosystem of agencies that the respective holding companies manage are already at each other's throats. Mainly, because of the very nature of how the holding companies work. “You've got to get out the most for your shareholders.” That's ultimately the goal. The balance of short and long term marketing strategy isn't really considered and as a result you have ineffective marketing, strategy and more short-term opportunities that clients are benefiting from.

I'm not saying that it's all bad necessarily, but there are  situations where sister companies underneath the holding company are competing for client mind share and it's constantly a race to the bottom. You're talking about a dog-eat-dog situation where there's a lack of cooperation and shared vision. I've seen it firsthand with Omnicom’s agencies. Good luck trying to get those guys to work together, that’s half of the struggle. If you don't you're basically left in the dust. As a result who suffers? The client suffers because they're not getting the best results; rather they're getting the most cost-effective result that delivers mediocre output for the client. I think that's a reality that will inevitably force the clients to consider Interpublic and WPP into another merger.

Also, top advertisers are going to be building capabilities in-house. They're going to want to build first-party relationships with the Facebooks, the Twitters of our generation and whatever else comes down the pike.  As a result they need the expertise in-house and, I think, a new type of agency and new type of holding company will be predominantly driven by automation, workflow, analytics, data capturing, and those facets of it. That’s an opportunity for Wren and Lévy to think about.  They should ask themselves these questions, “How did they miss the ad technology marketplace? Why haven't their trading desks matured?” That's simply because they don't have the inside-out view, or management consulting approach, of what's going to make an enterprise work. They largely missed out on that opportunity. That's a fact. Why haven't they pursued R&D? Why haven't they pursued improving their employee relations? Why haven't they rewarded long-term vision over short-term vision?  Unfortunately, no one's going to be accountable. That's kind of why I think they're getting bigger. And, as a result they're going to fall really hard.

Follow Cezanne Huq (@cezanne), Intuit (@Intuit) and AdExchanger (@adexchanger) on Twitter.

 

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