Mega Ad Agency Deal Impacts Nonprofits

Four of the nonprofit world’s most prominent fundraising agencies — Grizzard, Russ Reid, SCA Direct and Changing Our World — are part of a proposed merger between their parent company Omnicom Group and Publicis Group SA. If approved, the deal creates an organization with estimated market capitalization of $35 billion.

Omnicom (OMC) is headquartered in New York City and Publicis (PUB) is in Paris.

The publicly traded firms were the world’s second- and third-largest advertising agencies and will be known as Publicis Omnicom Groupe. Combined revenue for 2012, according to The Wall Street Journal, was $22.7 billion.

Omnicom’s branded networks and specialty firms provide advertising, strategic media planning and buying, interactive, direct and promotional marketing, public relations and other specialty communications services to more than 5,000 clients worldwide, according to Atlanta, Ga.-based Grizzard’s website.

In a Tweet regarding the merger, Grizzard CEO Chip Grizzard said that the deal would give the firm “greater digital resources to meet changing consumer and donor behavior.”

Goldman Sachs investment analyst Drew Borst was quoted in TheStreet.com as saying: “On digital, PUB has been acquiring stand-alone digital agencies (e.g., Digitas, Razorfish) and continues to run them independently. OMC built digital into its large agencies, opting for an integrated approach. It is unclear which method its clients prefer or which strategy the new company will employ.”

Changing Our World in New York City is a philanthropy and fundraising consulting firm with a heavy emphasis on digital. SCA Direct in Fairfax, Va., also is an integrated channel fundraising agency. Russ Reid, founded in 1964, is in Pasadena, Calif. It is a full service agency with a specialty in direct response television. Grizzard started in business in 1919 as LeGette’s Letter Service, which was purchased in 1928 by Claude T. Grizzard. The name was changed to Grizzard Advertising in 1932.

The combined revenue of the four nonprofit agencies was not immediately available. Russ Reid is the largest agency serving the nonprofit space and Grizzard is the second largest. Combined, the four agencies have more than 500 employees.

Tom Harrison, chair of Omnicom Nonprofit Group and CEO of Russ Reid, said due to Omni policy and it being a public company he is unable to disclose revenue. He did say, “The planned merger between Omnicom and Publicis would create the largest holding company of marketing talent in the world. We in the Nonprofit Group will be looking for ways to leverage this for our nonprofit clients. While I don’t expect it to impact our day-to-day work helping nonprofits grow, it’s exciting to be part of something even bigger and better.”