Omnicom’s much-talked about global takeover of the Interpublic Group (IPG) was expected to create upheaval in the advertising business, making the holding company the world’s largest advertising network by revenue. But, in its wake, the network has decided to relegate three iconic advertising agency brands to the history books – DDB, MullenLowe and FCB.
In India, these brands join the ranks of other agency names that defined the country’s advertising character in the 1980s and 1990s such as Lintas, Mudra and Ulka, all of which were absorbed by global networks in past decades. While FCB Ulka and DDB Mudra have been retired by Omnicom, Lintas has been given a new lease of life. The deal has revived the brand alongside TBWA, rebranded as TBWA\Lintas.
Industry leaders are sceptical
However, industry leaders are sceptical. Says Ashish Bhasin, founder, The Bhasin Consulting Group, & former APAC CEO for Dentsu, “The sad consequence of these consolidations is for brands like Lintas, which is huge in a market like ours. Currently, the new structure makes it TBWA\Lintas but we know that eventually the Lintas brand will probably be retired. It is unfortunate that advertising firms that are best known for their brand building abilities somehow don’t seem to be able to sustain their own brands.”
Even DDB Mudra, which had become one of the country’s top agencies with `850 crore in billings in 2004, didn’t survive the Omnicom axe. Known for its unforgettable work on brands like Rasna, Vimal, Dhara and Nestle Polo, DDB Mudra’s retirement marks the end of Indian advertising’s golden age.
It’s not just the brand names and legacies that will bear the brunt, but also their clients. Such an acquisition goes beyond just streamlining costs, say experts. Culture is a key differentiator for clients and employees.
According to Tarun Rai, co-chairman at Start Design Group and former group CEO, Wunderman Thompson, the complexity of such a deal means that there is a risk of the organisation becoming ‘inward-focussed’ in the short run. “This means there is a risk of people getting insecure or confused, or of a clash of egos. This means losing focus of the clients’ needs. That brings the risk of clients losing patience and walking.”
The Omnicom-IPG merger needs to be seen in the context of the current industry, which is struggling for growth and has been witnessing consolidations in the last decade. “The focus is on reducing cost and it is termed efficiency. In a business like ours where 70% of the cost is people, this means a loss of jobs and demotivated staff. In a declining industry, mergers have a reduced chance of success,” Rai remarks.
Lessons from WPP
Although the new acquisition is set to take Omnicom to the top globally, experts turn towards WPP and its recent struggles to demonstrate the uncertainty in the current advertising landscape. Once known as untouchable with barely any major competition, WPP today faces stiff challenges from a stronger Omnicom and Publicis Groupe.
Earlier this year, WPP reported a 5.9% drop in global net revenue for its third quarter and said the full-year decline could be as much as 6%. The network also recently hired McKinsey & Company to conduct a strategic review of its global operations. That said, the company still leads in India.
Sandeep Goyal, chairman of Rediffusion, expects that given the volatile nature of the business, things could change in the next 3-5 years and not for the better for WPP. “The entire advertising ecosystem is very fragile today and the biggest challenge is getting good talent in the industry at a time when clients are not willing to pay enough for creative work. Young talent are choosing lucrative opportunities with the likes of Netflix or YouTube,” says Goyal.
However, there is an opportunity here for large independent agencies. Rediffusion has been strengthening its AI-led offerings, which has won it businesses even from brands that usually work with large networks. “Independent agencies need to find a competitive advantage over network agencies, and that’s what we are trying to build,” he explains.
Nisha Sampath, managing partner at Bright Angles Consulting, points out that in past years, agencies were always defined by larger-than-life iconic personalities but increasingly now they are being defined by technology and solutions. “This creates an opportunity for independent agencies who can stand out for their calibre of creative minds. Ultimately, the mantra is now to evolve or die. Whether an agency is big or small, network or independent, it will need to be embedded in AI, offer full funnel services and have strong strategic and creative expertise,” she states.
Bhasin points to Sam Balsara’s Madison World as a case study for independent agencies to not just survive but thrive in an industry dominated by global networks. However, he expects that it is just a matter of time before Madison too folds into a larger network, given the commercial and market pressures.