I thought I would post this morning, while this news is still fresh and on everyone's mind.
As a recruiter, I can say this merger is terrible for talent. Since employees of one holding company are not allowed to go to another agency owned by that same holding company, it certainly further limits peoples’ choices.
I have always thought that the prohibition of moving between two agencies owned by the same holding company is probably in restraint of trade. But the prohibition of moving between the same clients at different agencies or holding companies is definitely in restraint of trade. This means that if someone is on Coca-cola at one of the IPG agencies, they can no longer go to any agency owned by Publicis or Omnicom.
The holding companies are pretty good at moving very senior talent among their shops – Omnicom does it all the time. But very senior is defined as probably EVP and higher. This leaves out the 95% of employees making under $250,000 or so. In fact, despite the fact that the holding companies all have human resources departments, there really is no mechanism for moving an account executive, writer, art director or media planner among their agencies. And, the rules being the rules, a writer at DDB, for instance, cannot be employed and then move to BBDO without all kinds of permissions.
While there is a policy in place which allows such moves at many of the holding companies, the rigmarole and paper work makes it both difficult and dangerous to approach management to affect such a move. This merger only serves to limit the possibilities even further.
I think David Jones, CEO of Havas, put it very well when he said this is bad for clients and employees. (Go to the link to see his full comment. However, this merger isn’t good for creativity, it isn’t good for competition. It will not produce greater marketing thinking. But, it will be good for the bottom line of the combined company. It will save, according to the various articles, about $500 million. That is, about a 3% savings for stockholders, which is certainly not a huge; it will hardly affect the bottom line of the combined company. I honestly believe that over the next 18 months, the revenues lost due to conflicts and unhappy clients will more than offset these savings.
The worst part of this whole thing is that I believe it will result in panic buying and merging of the remaining holding companies. Pretty soon there will only be two or three holding companies.