The Conflict Of Interest Conundrum For Publicis-Omnicom

conflict-of-interestAs analysis of the merger of Publicis and Omnicom Group rages on, one of the critical challenges ahead for the combined entity appears to be "conflict of interest."

AdExchanger's Zach Rodgers reported yesterday when the merger announcement was made, Omnicom CEO John Wren was non-chalant about potential conflicts: "Shared clients contributed over $6.5 billion in 2012. There will be the odd difficulty we'll have to make commercial decisions about at some point. But it's not overwhelming given the size and magnitude of this transaction."

Often the particulars of client strategies are as sensitive as launch codes in the eyes of the client and agency alike. If competitors were to get wind of an expensive marketing tactic in support of a new Cola launched by a leading multi-national corporation, for example, that competitor could easily undermine initiative with tactics of its own.

And that's where the concerns begin for clients: "Is there a chance that one member of the agency servicing me and my company will have some damaging, water cooler talk about our latest and greatest marketing ideas?" Let alone the marketing "reveal" as media budgets pour through an agency which, in turn, buys media on behalf of the client - and that financial data is chock full of strategic insights.

The answer for clients has been to ensure they have chosen an agency that their competitor doesn't use. For agencies, the agency holding company has been a model to help keep the business in-house - where competing clients might be at different agencies, within the same holding company. But, on top of that - and here's where it gets sensitive for Omnicom-Publicis - some larger accounts don't even want the same holding company as their competitor.

As AdExchanger has recently reported, in unique circumstances, the conflict-of-interest conundrum can be overcome if you're providing differentiated services. For direct marketing agency Merkle, their data science and assembled team brought together an offering that Travelers and Geico can't resist - in spite of the fact that they are competitors (Yes, Geico is like an ad network and sells Travelers, but still...) in arguably the most fiercely competitive marketing verticals, financial services.

Donny Williams, Chief Digital Officer of independent agency Horizon Media, says regarding the merger and its implications:

"I’m not sure I would term it a conflict of interest per se, but I do feel the proposed merger places a large emphasis on the ability to operationalize paid media efforts efficiently.  And if that’s the case, one could logically assume that not all media recommendations will be tailored to suit each individual client or brand because that may not offer the most efficient approach.  And yes, we  [Horizon Media] view this as a potential opportunity to continue to create custom media experiences that drive brand and consumer value."

 

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