Having read through several articles this week, it is no secret that the merge of Publicis and Omnicom is an answer to a major shift in the advertising industry, driven by non-stop development of digital capabilities but above all by the major focus on data-driven solutions.
I was initially planning to write about big data this month and how advertisers benefit from accessing more data to target users more accurately. On the one hand, it is a benefit since it provides users with a better experience i.e. I am shown ads that are relevant to my interests, but on the other hand it can also become a pain as it’s going into users’ most personal information e.g. Facebook Graph (read Mumbrella article here) to the point that even the FBI has requested access to use it (read Venture beat article here) which is really a thesis subject in itself – I think.
So, instead I would like to look at how digital and the use of data has changed the advertising industry to the point that two iconic competitors decided to merge. All the more that this is still relevant to the above non developed subject…
The weight of digital in the overall advertising industry raised in the last 10 years has it revealed to be the only stream capable to track and measure return on investment accurately across all channels (Social, EDM, Display ads, Paid Ads) vs. traditional ATL (TV, radio, Outdoor) which is still used but with the only hope goal to increase Brand Awareness rather than Performance i.e sales – ultimately what all companies are looking for to survive and continue to develop.
This initially started with the Paid Search advertising model (brought to you by Google) using real-time bidding, and soon after the development of ‘exchange’ platforms were Publishers & Ad agencies were able to share unwanted inventory – basically leftovers from traditional media buying advertising or sales if you compare this to the retail industry. In the beginning, there wasn’t a lot of pick up from advertisers as those placements were perceived to have a lower value and could ultimately damage the brand image, due to the lack of visibility of which sites this was advertised on, or the lack of ‘premium’ placements (expandable ads units for example).
But, as more websites were launched on the market, this model grew up to the stage were it is now providing advertisers with a more robust inventory, plus it provides a very accurate segmentation of the target audience at a lower cost than traditional display media thanks to a very simple & virtuous circle: the more targeted you are, the better you reach the right customer with the right message, the better the customer is likely to buy, the more sales you have, the better the ROI, the more budget you get for next campaign. And so on!
Now, the reason why such big mammoths of the advertising industry are merging is because they need to shift their model and start a huge investment on data technologies & analysis talents to survive. Creative and media buying are not enough to retain advertisers, data has become the third core elements to be successful in this industry and as Google & Accenture are developing new approaches to reach and re-target the end-user, they now represent a major thread.
Next episode should reveal whether this merge is an antitrust violation or not.