The Rs 300 crore Zenith Media, the media buying arm of advertising agencies Bates India and Saatchi & Saatchi, and the Rs 100 crore Optimedia, the media buying arm of Publicis, are expected to merge in India by the first quarter of 2002.
The merger will take place on the lines of the international merger that took place in October end this year between Publicis Groupe SA and Cordiant Communications Group (CCG) PLC. The two combined their media buying operations into one company, the $20-billion Zenith Optimedia Group.
The company is owned 75 per cent by Publicis Groupe and 25 per cent by CCG plc.
Commenting on the Indian merger, Tapan Pal, president and chief executive officer (CEO), Zenith Media Pvt. Ltd, told Business Standard: "It makes immense sense to combine the operations of both Zenith Media and Optimedia in India. But how exactly the two arms would combine would be told to us next week by our worldwide chairman and Asian CEO."
The merger is expected to give scale to the businesses of both Zenith Media and Optimedia. The merger would also bring along some benefits for clients, such as an ability to develop better software tools and systems and agreater ability to invest in an expanding range of service lines Under the new combined structure in India, the two arms would either merge into a single entity or continue to operate as separate entities, with a common backend support solution. Said Pal: "With the merger, our ability to invest in research and planning would become better. It will be a fruitful alliance because Zenith Media worldwide is known for its media buying skills and Optimedia for its strategic media planning." However, whether or not the workforce of the two arms would be combined is yet to be decided upon.
According to Pal, consolidation in the media buying industry is on the rise and is for the better. Said he: "Today more and more clients need the kind of research media buying agencies conduct for them and hence it becomes imperative for us to invest in elaborate research. And therefore, consolidation is the route for a company to grow larger in its database and resources."
In July 2001, Media Vest, the media wing of the Ambience D'Arcy side of the business, and Starcom, Leo Burnett's side of the business, merged.
With the current growth rate of 65 per cent, Zenith Media expects to become a Rs 500 crore media buying agency by the end of 2002. It has managed to gain business worth Rs 80 crore in the past two months, with its latest client list comprising LML, Maxima Quartz, Tata AIG, Amul, among others.
