What The Publicis-Omnicom Merger Means To VCs

POG-mergerAs news of the Publicis-Omnicom mega merger settles, questions remain about what this means for the advertising landscape. AdExchanger reached out to venture capitalists who fuel much of the ad market and asked them this question:

“What impact do you expect the merger will have on ad tech and venture capital, if any?”

Click or scroll down to read their responses:

Jerry Neumann, Founder, Neu Venture Capital

“Omnicom was one of the leaders in digital in the ’90s but sat out the last decade. That this is a ‘merger of equals’ despite Omnicom’s greater size is, in part, because Publicis has aggressively engaged with the current wave of ad tech innovation. The holding companies took advantage of the fragmentation of media in the 80s, 90s, and 00s to make their media buying arms indispensable. The new online media giants and the re-intermediation of online media buying through the programmatic media buyers threatens the holding company dominance in media buying and their exclusive ownership of the client relationship. This merger, albeit expensive for Omnicom, staves off that threat for another few years.”

Darren Herman, Founder, kbs+ Ventures

“Someone a lot smarter than me recently said, ‘History has proven that size and creativity tend to be inversely proportional, and that scale is the enemy of innovation.’  I predict that outside of Publicis Omnicom Groupe, we’ll continue to see the use of advertising and marketing technologies creating the scale and efficiencies needed to compete against POG. One would be a fool to think that POG is the only future of the industry; we need to keep our agency sights on those who are building relationships with the Chief Marketing Officer:  Facebook, Salesforce, IBM, Oracle, Google and many others.  After all, Google receives 55 cents on the dollar in the digital media world.

Chris Moore, Partner, Redpoint Ventures

“I think the merger should be a positive for ad tech and their venture capital firms in a couple of ways.  First, the Omnicom-Publicis combo should enable them to invest more aggressively in digital/programmatic capabilities which should fuel more dollars to our companies.  Also, Omnicom-Publicis could look to acquire capabilities to compete with Google, Facebook, Adobe, etc., which adds another player to the mix for M&A. The only downside I see is increased buying leverage, but the benefits outweigh the downside.”

Kiran Hebbar, General Partner, Valhalla Partners

“I think this will have minimal impact on startups and venture capital activity in the short term, as it will take some time for the deal to get regulatory approval followed by integration. In the medium term I think the effect will be a mixed bag. In as much as the combined holding group consolidates vendors, some will win and others will lose.

It offers the opportunity for some startups to more easily cross-sell their offerings within the combined group. If clients leave because of a conflict or account teams are consolidated under one agency, it could adversely affect some startups. I hope scale doesn’t bring with it more bureaucracy – for a young startup this is the least desirable aspect of dealing with an agency, trading desk or holding group. In the long term I think this could be neutral to positive. This could give some CMOs pause and tempt them to experiment with bringing technology in-house. That will unleash a new cycle of innovation and VC investing.”

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