No challenger to WPP in India as Publicis, Omnicom merger called off

The coming together of Publicis and Omnicom would have positioned the combined entity as a strong number two to the Martin-Sorrell-led group in India

The $35-billion merger between Publicis and Omnicom being called off means there will be no challenger to the Martin-Sorrell-led WPP Group in India.

The WPP Group remains the leader in advertising and marketing communications in the country by a wide margin (see chart) and the merger of its two archrivals would have positioned the combined entity as a strong number two. For now though Publicis and Omnicom alongwith WPP are expected to chase the number four player, IPG, with gusto, according to advertising sources.

"The decision to discontinue the process was neither pleasant nor an easy one to make, but it was a necessary one," Publicis Groupe Chief Executive Maurice Levy, 72, said in a statement on Friday.

Omnicom Chief Executive John Wren was more elaborate about the deal's failure to the international press. "There are a lot of complex issues we haven't resolved. There are strong corporate cultures in both companies that delayed us for reaching an agreement. There was no clear finish line in sight and uncertainty is never a good thing when you are in the personal service business," he told Reuters.

From an India point of view, their coming together would have also meant significant clout for Omnicom and Publicis in media and digital, since those ends of marketing communication typically derive strength from consolidation. But that has been ruled out for now with both groups having to work on building scale in the two segments on their own.

"The big advantage of the merger was that it would have allowed Publicis and Omnicom to quickly consolidate their operations in digital and media, two areas where agencies are focusing their attention significantly in India. This would have made them a powerful force to reckon with in the Indian context and to some extent would have reduced the hold that GroupM has in these areas when it comes to negotiating ad rates. This will not happen now," said the chief executive of a Top 10 agency who declined to be quoted since he belongs to one of the two ad groups.

Both Publciis and Omnicom are expected to pursue their inorganic growth strategies aggressively in India. Publicis, in particular, has been aggressively buying companies, having wrapped up nearly 10 acquisitions in two years across digital, brand consultancy and advertising.

During his visit to India in December last year, Levy had said, "We derive 25 per cent of our revenues from emerging markets. We want to take this to 35 per cent in four years. India will play a key role in helping us achieve this objective."

Omnicom, on the other hand, made its second Indian acquisition after Mudra of digital agency 22feet in February. The group has articulated the importance of the Indian market and has said that it is keen to ramp up its presence in the country.