1. Omnicom And IPG Become One

I’ve always loved the name “Omnicom.”

It sounds like the evil corporation in an Austin Powers movie, the sort of place Frau Farbissina would have worked. So I am hoping that it survives the conglomerate's impending merger with Interpublic Group, whose name sounds like the one they rejected in favor of Omnicom.

While the merger is no doubt good for both companies and their respective shareholders and top executives, I can’t help but feel a twinge of despair every time two behemoths merge.

Mostly because it usually means less, rather than more innovation at a time when the industry could really use some.

Why It Matters

There are the more human reasons that mergers can suck: there are redundancies and/or client conflicts and people lose jobs.

Concentrating power into fewer hands at a time when the government is unlikely to care about that sort of thing is never a good thing. Especially when it’s being mirrored on the sell-side too.

But since I am a glass-half-full kind of guy, I also see opportunity. 

Behemoths are really bad at innovation. They are invested in the status quo and while they often give lip service to innovation as it checks some boxes for their equally risk averse big clients, they try to engage in as little of it as possible.

Which opens the door for anyone who can figure this all out.

And by “this” I mean the shift from linear to streaming and how it means going from a very easy to navigate system that has been in place for the past 50 years and replaced it with one that can often feel like it’s embodying the worst excesses of the French Revolution, up to and including the 10-day week. 

What this means is that the door is open for the next generation of innovators, in a world where small teams can take on big companies.

That would sound even more trite, but for one of the bigger changes taking place in streaming: the massive growth in the number of companies advertising on TV.

Streaming, with its better targeting capabilities, has expanded the number of advertisers that can run national or regional TV spots. That number seems poised to grow exponentially too with the boom in small and medium businesses (SMBs) advertising on TV.

The argument for that is simple: the biggest impediment for most SMBs has been the cost of producing a TV commercial. Even a low budget spot could set them back five figures and the result looked, well, low budget.

But with Sora and similar AI-based tools on the way, production costs will come way down to the point where the sort of self-serve products that turned Google and Meta into behemoths become common on TV. 

This is not mere speculation on my part either: there are a number of companies already working to make this real, two of whom you’ve likely heard of: Amazon and Paramount.

The question, of course, is whether local hair salons and car repair shops (whose “marketing department” is likely one of the owners or a relative thereof) will want to spend the time and effort learning yet another new system and whether TV can deliver the same sorts of results that Google and Meta do.

Which is a valid concern for some of the market, but I remain convinced there are enough curious/innovative souls out there who will be enthralled by the opportunity to use AI to create their own TV commercials and show off their creative chops that we will see widespread adoption. This is particularly true for a younger generation that grew up in a post-Facebook world, one where “Influencer” was a dream job and where video is a more powerful medium text.

So there’s that and it should result in the creation of a number of independent players who capture the spotlight. At least for a little while and enough to scare the big guys, give brands something to threaten them with. 

I am enough of a realist though to know that once those businesses start to really make money, Omnipublic and its brethren will snap them up like so many minnows.

So there’s that, but there’s also the other side of behemoths, which is that they have an easier time asserting their will. And if we’re lucky, one of those assertions will be that we need to have a standardized measurement system for TV, where everyone agrees what a view is and how it’s being measured and who is doing the measuring.

Which would go a long way to restoring the confidence of all those clients, big and small, who have been waffling about putting all their chips down on streaming.

What You Need To Do About It

If you are Omnicom and Interpublic now would be a good time to try and set some standards around TV measurement. It would put a rosy glow around your merger and would help your bottom line—not to mention your stress level—immensely. 

Something to think about, along with how to not lay off quite as many people as you normally would in these kinds of mergers. Or, if you need to, how to do it humanely. Meaning not via a random email or Zoom call.

If you are Dentsu and Publicis and a host of smaller agencies, there will soon be a lot of very good people looking for jobs. Hire them.

If you are one of the companies looking to pull those SMB dollars away from Google and Meta, now would appear to be the time to go full throttle: OpenAI released the first public version of Sora this week and they already are struggling mightily to keep up with demand for it. 

Carpe diem.

2. WBD Makes Nice With Comcast

It would be a massive understatement to say that this has not been a good year for Warner Brothers Discovery.

Or even a good last few months.

Most notably, they lost their rights to NBA games, which seemed to render the Venu app dead in the water, along with whatever hopes they’d had of luring in sports fans and the carriage fee dollars that come from having networks that appeal to said sports fans.

But there’s a bit of good news on the horizon this week. Comcast has agreed to a deal that should make WBD shareholders happy. Not only will they be getting fatter carriage fee checks for their networks (except for the NBA-less TNT). but Comcast will distribute those networks via Sky in the UK and Ireland. In return, WBD will allow Comcast to include the ad-supported versions of Max and Discovery+ in its streaming bundles, thus likely increasing the audience for both.

And if that wasn’t enough good news, the dispute the companies have had over Harry Potter rights has been resolved.

Why It Matters

The legacy media companies need to have each others’ backs. Because, to paraphrase Ben Franklin, if they don’t all hang together, then assuredly they will all hang separately. They are small potatoes compared to the internet giants and if they continue to fight each other, that’s going to be a problem.

Losing NBA rights was a big deal for WBD, but Comcast seems to have done the math and determined that this does not impact the appeal of most of WBDs other cable networks.

And while cable may be slowly dying, slowly is the operative word here and with 70 million US households still paying for linear TV, there’s a whole lot of money to be made for both companies in the short term.

Similarly, The Great Rebundling, putting ad-supported Max and Discovery+ into a Comcast streaming bundle is a huge win as it both increases the number of ad-supported subscribers both services will attract (something they’ve been struggling to do) while simultaneously locking viewers into year-long packages which helps to reduce churn. (NB: That is typically how those deals work. It is unlikely but not unthinkable for Comcast to decide to make them month-to-month.)

So a win for both companies as it gives Comcast a way to keep broadband subscribers who like the idea of discounted streaming bundles.

So there’s that too.

But mostly the deal largely keeps the status quo in place while allowing the shift to streaming to happen incrementally. Which, when you are struggling to maintain the balance between them as you shift the bulk of your revenue stream from one to the other, is a very good thing indeed.

What You Need To Do About It

If you are WBD, well done. This deal is the good news you and your stockholders needed this quarter and while it’s not groundbreaking, it helps you to put the NBA loss into perspective or at least make it look less traumatic. 

You’ve still got a strong property in HBO—the hitmaking machine there managed to survive all the corporate upheaval—though the jury is still out on CNN and its ultimate role in the Trump Restoration, where CNN’s ratings are sure to matter more on Pennsylvania Avenue than they are on Madison Avenue or Avenue of the Stars.

If you are Comcast, well done too. You’ve shored up Sky some, gotten your streaming subscribers a very good deal and negotiated an end to the Harry Potter nonsense. 

Bottom line being you’ve both bought yourself a little extra time to figure out what’s next. Use that gift wisely.