The differentiator is: Who holds the data?
Immediately following the Publicis-Omnicom mega-merger that came on a sunny Sunday afternoon in France, a couple of questions remained. To what extent was the deal motivated by technology-driven changes in marketing? And what are the deal's implications for consumer tech titans like Google, Twitter and Facebook?
“If you talk to agency execs today, and said, ‘If you’re looking 10 years out, what are the companies you’re worrying about?’ they wouldn’t say other holding companies,” said John Nardone, CEO of [x+1], the enterprise Demand-Side Platform and data-management platform. “They would say Accenture, IBM, Salesforce.com. The companies that are democratizing technology and making it more accessible for users.”
Dan Salmon, equity research analyst at BMO Capital Markets, offered up a similar view, saying that in addition to the possible moves that could be made by the Interpublic Groups and Dentsus of the ad world, “the new competitive set [for the ad holding company] is the IT services company… the Accentures, the Cognizants. IBM’s a little bit of an exception because they’ve got software and services together… it’s very complex and dynamic.”
For enterprise players like Salesforce.com and Oracle, their power, some would say, lies in-house – a place where the marketer or CMO is projected to control more marketing tech spend than IT by 2017, according to Gartner estimates. With that will come more strategic control around the selection of marketing service providers and increased digital marketing decision-making. But, most of all, it could mean more control of client data.
“With the recent buzz around Salesforce.com and Oracle and some of the traditional technology companies nibbling in to the ad stack, I think it’s a big opportunity for Publicis and Omnicom to use that scale to wrestle that control back in a very different manner,” said Paul Chu, VP of RTB sales and publisher development at PubMatic.
For instance, Omnicom’s data and analytics division Annalect announced in June it would deploy Salesforce.com’s Marketing Cloud platform across an agency network of approximately 5,000 clients. Hypothetically, an Omnicom ad manager could manage social ad campaigns through Social.com with CRM integration for access to customer data to improve targeting efforts. More of these holding company-enterprise tech alliances could be key.
As for the tech companies, Omnicom’s John Wren said during the press conference Sunday (see AdExchanger story), that “five years ago Google, Facebook, Twitter didn’t even exist … We have many new competitors today than we would have five years ago.” But the fact remains that Google and Facebook are sources of premium inventory to media buyers, which wouldn’t make them a direct competitive force for the holding company, so to speak.
With the automated DoubleClick exchange or FBX, for example, leveling the playing field through programmatic buying, it lessens the chance that massive scale at the holding level will matter on a deal-by-deal basis.
However Nardone said he still thinks “it becomes incumbent upon those companies to work very closely with [the holding companies] because they have a disproportionate amount of spend base.”
If, as a combined entity, Publicis and Omnicom come close to managing half of all ad spend in the US, as some reports indicate, “this kind of gives them the ability to exert their own standards,” Chu said. “So, while they haven’t in the past, that’s going to create a tremendous amount of opportunity for them to dictate terms in platforms and standards and that’s where you kind of see where they’ve been investing in the ATDs and moving toward data” management and a renewed focus on digital tech.