To understand the huge advertising and marketing communications merger this week between Omnicom and Publicis, one need only look back eight years to another advertising deal when Canada's Yellow Pages bought SuperPages for $2.55-billion.
That turned out about as well as horse carriage makers merging 100 years ago in a bid to gain "greater scale", as the bean counters like to put it, in the then-emerging world of automobiles.
The $35-billion merger of Omnicom and Publicis points to a similar fate. If I were working at an Omnicom or Publicis company today, I would be hoping for the layoff payout as the merger surely will result in job cuts. And if I happened to be passed over in the first round of cuts, I'd be updating my LinkedIn profile anyway. This deal has the earmarks of disaster written all over it.
As the great 18th century British philosopher and statesman Edmund Burke said, "Those who don't know history are doomed to repeat it."
Traditional marketing thinking was all about the 4P's of price, product, promotion and place - and the only way to get promotion at scale was to advertise in traditional media channels such as TV, radio and print. The ad agency business was about working with companies to create the content and subsequently placing ads.
In an increasingly digital world, there are countless new promotion alternatives and the traditional channels are shrinking at the same time. Companies have figured out that they can stop wasting money on advertising and spend more time connecting with their customers directly.
The executives at Omnicom and Publicis are ignoring the reality that digital technology and social media have forever changed the old advertising model. In today's world of Google, Facebook, WordPress, and so many others, greater scale does not ensure victory in anything.
Just ask Marc Tellier, the once-bright young star who lost his job as CEO of Yellow Media Inc. earlier this year because he could not transform one of the most recognized brands in Canada during the digital age. Google, Craigslist and a myriad of other free services ate Yellow's lunch and spit up Tellier.
The same will likely happen with the new Omnicom Publicis Group if shareholders and regulators approve the merger.
Two things to bear in mind, which have not generally been talked about this merger:
First, the Omnicom and Publicis entities today are run by people who cut their teeth in the outdated legacy advertising business. As Eric Schmidt from Google has said - they need to hire some engineers in leadership positions. I'm not saying engineers or tech heads have all the answers, but they seem to be ahead of the curve in the digital age. And when they recognize needs on the creative side, the successful companies like Google and Apple go out and hire people with those skills.
It is the discipline of the engineers' minds, not the artistry of the creative minds, which run the companies and dictate the cultures of success.
Second, with all due respect to the corporate spinners at Omnicom and Publicis, so-called creative -- or innovation -- does not scale up. In fact, it's the opposite. Steve Jobs proved this over and over; from personal computers to smart phones.
"Innovation has nothing to do with how many R&D dollars you have," Jobs said. "When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It's not about money. It's about the people you have, how you're led, and how much you get it."
The more people you have sprinkled all over the world with disparate ideas, living in different cultures and speaking different languages is not a recipe for innovation.
Again, Steve Jobs: "Innovation comes from people meeting up in the hallways or calling each other at 10:30 at night with a new idea, or because they realized something that shoots holes in how we've been thinking about a problem."
We live in a landscape where the old advertising model from the Mad Men era no longer exists. Printed papers are disappearing. Broadcasting is beyond being in flux; it is simply not what it was five years ago, let alone 20 years ago. We're watching hit shows on tablets, through Netflix or straight from the Internet. PVRs and other devices allow us to tune out commercial advertising.
Just because the Omnicom Publicis Group will be the biggest advertising and communications marketing group in the world does not mean it will be best, or remain in top spot for long.
With this merger, they're simply trying to close the barn door after all the digital horses have left. I'm putting my bet on the likes of google and others ahead of these 20th century mad men!
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