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Omnicom/Publicis to face-off with Google over digital advertising leadership

Omnicom Group and Publicis Groupe are putting their combined strength behind a bid to gain a bigger foothold in the quickly growing digital advertising landscape, with mobile playing a key role.

The new combined entity will be big enough that it will have the potential to wrest some control back from Google, which plays a big part in how digital ads, including mobile, are created and delivered. In this sense, the deal is about big data and the desire for these traditional advertising agencies to equip themselves for an industry that is increasingly dominated by data analysis and automated ad buying.

?There is not one advertising firm that does not believe that mobile advertising, or any digital form, is going to be the key driver and generator of revenue,? said Dipesh Mukerji, senior director of product strategy and marketing at Kony, Orlando, FL.

?The writing is on the wall; every ad agency must have a digital revenue strategy in the future, or it will be left in the dust,? he said.

?Print, TV and traditional ad delivery methods are plateauing or are dying breeds, and the future lies with digital ads.?

Mobile conglomerate
and Publicis said over the weekend that they would merge to create a $35.1 billion company, supplanting WPP to become the largest advertising firm in the world.

The deal is likely to impact the mobile marketing services sector, with the potential for bigger deals but also more pressure on pricing.

For Google, Facebook and others looking to build a strong mobile ad business, a transition that has not always been smooth for the traditional desktop companies, the newly merged agency behemoth could have the power to impose their vision on these tech companies since it will dominate such a large portion of the media spend.

With digital advertising now the norm for many brands, and mobile?s rapid ascent promising an even bigger role in the future, companies such as Google, Facebook and others are playing an increasingly important role in advertising.

However, they are still vulnerable, particularly in mobile as Google?s recent financial results show, meaning that the time could be right for agencies, which have been accused of not moving fast enough to take advantage of mobile, to gain more control.

The sheer size of the newly combined agency could pose a challenge in the mobile space, where things are still evolving quickly and being nimble can be a significant asset.

Here, executives from around the mobile sector comment on how the merger will impact mobile marketing.

Steven Louie, creative director at independent agency Flightpath, New York
In terms of targeted advertising, in that perspective, it is all about mobile, it is going to be all about mobile in the future. In those terms that was the threat that was perceived and that lead to this merger.

They used to control the platforms that they advertise on, now it is more self service. As a small agency, we know we can just go into Google and place the ads against the big boys. The only thing we lack is the dollars.

The big agencies tend to move slower. They move slower in terms of reacting to the platforms that exist and to what?s next. I am not saying that being bigger will necessarily make them move any faster, but it will kind of give them the synergies of a bigger organization and a bigger bully stick to work with.

They?d be better off fortifying their relationship with a Google, Facebook because they are the ones who own the pipes. They are not going to be able to build their own pipes easily.

Cliff Medney, chief creative strategist at Flightpath
Is it possible for a big behemoth to be as relevant? I think it is a really hard question when being nimble, being multi-facing, being client-facing is so important.

In terms of clients conflicts, how are you able to keep all eyes on all balls when you have this huge layer to deal with. Whereas at the end of the day, clients are demanding more, we?re wanting to give them more and part of more is really what?s next and how to deal with what?s next now.

Everyone from the platform players to ad providers, are finding there is a nimble way to be involved in a much richer way, and if you are not, you might as well not even play.

Eric Johnson, founder and president of Ignited, El Segundo, CA
The merger of these companies isn?t really a mobile story. Mobile is the fastest growing part of digital, and clearly digital is one element that is driving change in the industry. The biggest ad agencies and holding companies have been aggressively buying up firms and hiring talent to help make sense of the digital and mobile landscape. Both firms had strong footprints in mobile before.

For mobile service providers, there are potential positives and negatives. On the plus side, you could see consolidation of buying across the rolled up buying agencies, making it easier to sell larger deals, the way TV is bought. On the downside, the holding companies could exert pressure on pricing with the clout that could come from this deal.

Steve Minichini, president of interactive marketing at media agency TargetCast, New York, an MDC Partners agency and part of Maxxcom
After the merger, the new agency entity will focus on corporate-wide negotiations with a few, strong performing mobile media companies. This will benefit some and eliminate a few from consideration.

Developing unique innovative serving technologies/selling proposition should be of critical focus to pure-play mobile vendors.

Over the next year to year-and-a-half, the new agency entity will begin to carve out unique partnership opportunities in which winning mobile players will realize significant budget increases. Innovation, campaign performance and media efficiency will be key.

Dipesh Mukerji, senior director of product strategy and marketing at Kony, Orlando, FL
Consolidations and mergers like this do not deter brand clients from leveraging mobile; consolidation like this in the market enables brands clients to ask for more engagement in digital mediums because brand clients realize that such large scale consolidation gives the companies that are surviving even more leverage.

The benefit for mobile service providers is that now there is more access and more content for them to be able to impact and touch their customers in every ad delivery mechanism. The negative side for mobile service providers is the cost. Consolidation in the ad space give the agencies that survive more leverage to charge what they want for ad impressions, and that certainly could mean more costs for an AT&T, Verizon or T-Mobile to deliver ads.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York