Rivals poach Publicis, Omnicom clients, staff as merger faces snags

Thu May 1, 2014 1:18am EDT
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By Kate Holton, Jennifer Saba and Leila Abboud

LONDON/NEW YORK/PARIS (Reuters) - Publicis and Omnicom have lost more than $1.5 billion of client work in recent weeks and face a fight to retain billions more, including a huge Samsung contract, just as the two advertising firms struggle to keep their merger on track.

When the world's second and third-largest ad groups announced a merger last July, it sparked talk from rivals, led by Martin Sorrell, the boss of current leader London-based WPP, that the U.S. and French firms could lose clients and talented staff as a result.

Now, with the deal's closing delayed at least six months because of regulatory issues, and relations so tense between the two that they haven't been able to solve a seven-month dispute over who becomes new finance chief, Sorrell has been boasting about being successful in winning business from them and poaching their staff.

Several large contracts, including Vodafone's $1 billion global media and buying account, moved hands from Omnicom to WPP in April.

On Wednesday, Microsoft announced it was moving its multibillion-dollar ad and media business from Publicis and WPP to Japan's Dentsu Aegis and U.S. Interpublic. Others to move away from Publicis or Omnicom in recent weeks include food maker Danone, pharma group GSK, electronics firm Sony, and retailer Marks & Spencer.

In the ad business, accounts do change hands quite regularly - in the case of some companies every few years - and there are often reviews and pitches for the business when contracts come to the end of their terms. Also, none of the clients who have jumped ship have publicly blamed the merger.

Omnicom CFO Randall Weisenburger noted on an earnings call last week that swings in the business, such as the Vodafone loss, are quite normal. "Each quarter you get one or two big wins or one or two big losses," he said.

And the wins are not all in WPP's favor. Publicis prevailed against WPP on a contract with food company ConAgra in February and its BBH agency expanded its role with British Airways at the expense of WPP's Ogilvy in March.   Continued...

Omnicom Chief Executive John Wren (L) and Publicis Group Chairman and CEO Maurice Levy shake hands after announcing an agreement on their merger on the floor of the New York Stock Exchange in New York in this July 29, 2013, file photo. REUTERS/Shannon Stapleton/Files