Making the Most of Advertising Agency Mergers and Acquisitions (A Client’s Guide)

In light of the recent Publicis Omnicom merger announcement, viewpoints have varied among industry leaders (e.g. ANA, AdAge, Wall Street Journal, Forbes). To supplement the conversation, The Bedford Group has reposted its thoughts on the effects of advertising agency M&A. It should be noted that the comments refer to M&A activity in general, not specifically the arrangement between Publicis and Omnicom. Should you have any questions after reading, please contact Dan Plachta at Making the Most of Advertising Agency Mergers and Acquisitions (A Client’s Guide) The client agency relationship is a sensitive one that requires open communication, transparency and constant oversight.  Whenever big moves occur in the client or advertising agency organizational structure, the relationship can suffer unnecessarily, leading to time consuming adjustments of protocols or costly mistakes when day to day activities become a secondary priority.  Much like other industries, mergers between advertising agencies are rarely without headaches on the client-side. The net, net is that change is rarely what you think it is or what it is promised to be. If you’ve ever been on the receiving end of a bank merger, you know the difference between the promised and actual extra resources, improved service and technology advancements.  Or the airline acquisition that promised more routes when in fact, the merger proved to serve the corporation, not the customer, leading to fewer flights, diminished amenities, lesser rewards and more expensive tickets. The difference of course, is that a client agency relationship should be a partnership.  A pact between equal partners.  So, when advertising agencies merge or otherwise grow, clients must be assured that they benefit from all of the good that is associated with the new company and hopefully have a say in future plans that are mutually beneficial and sustainable to both parties. There is no “easy button” to handle the relationship challenges that will occur as a result of M&A, but at the least, both client and agency should start with a dialog.  Openness and candor should be encouraged as you ask how the merger will affect your business.  After all, it should be what’s in it for you.  Be proactive by carefully laying out your expectations and “hear” what the agency has to say about the opportunities.  Discuss what changes will be near-term and long-term.  Develop a plan for ramp up. Most importantly, understand how much influence you have on the decisions being made about your account. How loud is your voice and who is listening? Here are more potential wrinkles as you hit the agency M&A trail together:
  • Media.  Probably the best part of a consolidation is the increased leverage of the combined companies in controlling media costs and growing their influence in the marketplace.  Clients of all sizes should benefit from the increased buying power which might drive competitive advantage.  What might you expect on the efficiency equation?
  • Competitive conflicts.  Whenever an agency merger/acquisition is rumored, it is important to understand how conflicts are being seen and will be handled. Be certain your contractual agreements include the appropriate language to protect your investment and your intellectual property.  Even still, in an industry where one idea can make or break a year, it may be uncomfortable for you and a major competitor to sleep under the same roof.  If that’s the case, don’t wait; sever the chords quickly and ask how your current agency might participate in the costs of change.
  • TurnoverProbably the most valid concern after a merger is a change in account team, across all disciplines.  If the new entity has a larger client demanding your beloved creative directors be assigned to their business, prepare to fight that battle.  Turnover is one of the most often cited reasons for the failure of the client agency relationship.  Don’t be party to “go along” with change if you feel it will materially impact your business.
  • System Changes.  One of the benefits of agency consolidation is increased operational efficiency.  That’s good, but the journey may not seem worth the end while you are traveling that path.  Accounting, IT, and HR may need to be brought in to integrate the whole.  It is important for marketers to understand which systems will be evolved or changed altogether; what impact will this will have on the platforms already in place.
  • Culture.  It can and will be affected.  What might be the DNA of the newly merged organization and how will you feel about the spoken and unspoken agenda of this new and improved organization?  Further, how will your marketing team sync up with those that have been newly assigned to your business?  Prepare for a 360° client agency assessment to help identify gaps and development plans for better, stronger communications.
Summary Advertising agency mergers and the client agency relationship changes that occur as a result of initial chaos, may also produce a better, more efficient way to do business with your partner.  Clients can, and should, benefit from the new entity if they have been allowed to have a voice.  Use it.  In times like these, it is more important than ever to assess and evaluate your agency relationship to make sure the long-term impact of the merger will not have a negative effect on your business results.

About The Bedford Group

The Bedford Group is an Atlanta based Marketing Management Consulting firm that has been in operation since 1986. It has built its reputation on marketing organization support, agency search and relationship management and strategic marketing consulting.  Unlike traditional advertising consultants, The Bedford Group looks beyond traditional marketing disciplines to solve complex, enterprise-wide issues for efficient resource management and improving marketing ROI.

Kerry Kielb
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