Speculation suggests advertising is tilting significantly toward digital, crimping traditional means of revenue
Two of the world’s biggest advertising companies are said to be contemplating a merger, the latest sign that shifts in the way marketers communicate with consumers has crimped income and revenue for corporations that have long made their money from TV commercials and print ads.
The two companies, New York-based Omnicom Group and Publicis Groupe of France have long grown through expansion. Omnicom owns venerable ad shops like BBDO, DDB and TBWA\Worldwide and creates as for blue-chip advertisers like Apple and PepsiCo. Publicis operates agencies like Leo Burnett and Digitas and works for such marketers as Procter & Gamble and Honda.
Reports that the two companies were considering a merger was reported previously by Bloomberg, which said the talks could also fall apart. A spokeswoman for Publicis Groupe, Peggy Nahmany, did not immediately respond to an email seeking comment and a spokeswoman for Omnicom, Joanne Trout, did not immediately respond to phone messages seeking response.
The reports take place as advertisers have started putting more money into advertising via digital means, whether that include ads placed alongside streaming videos, promotions tucked into social-media outlets like Twitter posts and Facebook pages or mobile applications on tablets and portable phones. But ad agencies have long thrived on creating big-budget efforts for TV and print, two mature media outlets that are fighting for ad dollars alongside digital media concerns like Yahoo, AOL and Google.
Kantar Media, a tracker of ad spending said marketers spent just 3% more on U.S. TV, print, outdoor, Internet display advertising, and radio in 2012. In the first quarter of 2013, Kantar said, ad spending on those media was flat with that in the year-earlier period.
Pivotal Research Group analyst Brian Wieser estimated a combination of the two companies would account for 40% of the global ad industry, approximately twice as much as the world’s current dominant ad concern ,WPP. “Our view is that such a transaction is unlikely to occur,” the analyst wrote in a Friday research note.