Let's Make a Deal
Austin-based GSD&M and LatinWorks scooped up in global ad agency mega-merger
A blockbuster merger announced July 28 between advertising giants Omnicom Group and Publicis Groupe will affect hundreds of creative professionals in Austin. The Omnicom-Publicis deal will result in the world’s largest ad agency.
Included in the merger’s local mix is Austin’s biggest ad agency, GSD&M, which is a wholly owned subsidiary of Omnicom. Founded in 1971, GSD&M joined the Omnicom fold in 1998 and employs more than 400 people.
GSD&M counts among its clients Southwest Airlines, the U.S. Air Force, Marshalls, HomeAway, L.L. Bean, PGA Tour, John Deere, Goodyear and AT&T.
Omnicom CEO John Wren said job cuts are not planned in conjunction with the merger. “The strength of the two groups is their complementary nature.”
Another Omnicom firm based in Austin is LatinWorks, the city’s second-largest ad agency. Founded in 1998, LatinWorks specializes in multicultural advertising. In 2006, Omnicom bought a minority stake in LatinWorks, which employs more than 170 people.
Clients of LatinWorks include Anheuser-Busch, Domino’s Pizza, GM, Lowe’s, PepsiCo and Target.
Other Omnicom businesses with an Austin presence are two PR and marketing agencies: FleishmanHillard and Porter Novelli. The only Publicis company with an Austin office is marketing agency Razorfish.
On Sunday, Omnicom CEO John Wren said job cuts are not planned in conjunction with the merger. “The strength of the two groups is their complementary nature.”
Once the merger is complete, the new company will be an advertising, marketing, PR and digital services powerhouse known as Publicis Omnicom Group. In 2012, combined revenue of Paris-based Publicis and New York-based Omnicom totaled $22.7 billion.
Jeff Hahn, principal of Austin-based PR agency Hahn Public Communications, said the companies under the Omnicom and Publicis umbrellas “are among the best in the world, and I’m betting the new front office will take care to not ruffle the feathers of their golden geese too much.”
Because many people believe bigger is not always better, the Omnicom-Publicis marriage may boost the appeal of small and large independent agencies, at least for some clients, said Neal Burns, an advertising professor at the University of Texas.
“The agency business, in part, has always reflected the attractiveness the client saw in the culture of the agency it selected,” Burns said.
Around the world, Publicis Omnicom Group will employ more than 130,000 people. Initially, Omnicom’s Wren and Publicis CEO Maurice Lévy will lead the company as co-CEOs. After 30 months, Lévy will become non-executive chairman, and Wren will remain CEO.
The merger still must clear shareholder and regulatory hurdles. The deal is expected to wrap up in the fourth quarter of 2013 or the first quarter of 2014.
“In the agency game, it’s as risky to stand pat as opportunity passes by as it is to push your chips to the middle of the table, so hats off to them for playing big,” Hahn said.