On the hunt for a CEO
Media shops should brace for some new, well-funded competition. Omnicom, which already owns the OMD and PHD networks, is currently developing a third media agency brand.
Daryl Simm
While Omnicom is still in the early planning stages, its media recruiters in the past couple of weeks have begun reaching out to senior-level executives in the industry in the hopes of poaching a prospective CEO for a third shop, according to multiple people familiar with the outreach.
Representatives for the ad holding company’s media arm, Omnicom Media Group, declined to comment.
The move is likely a play to navigate the thorny world of client conflicts. Setting up a third media agency would mean it was following in the footsteps of others that have recently created new options for marketers in the hopes of being able to participate in more media reviews.
Last year, Publicis Groupe media agency network Starcom Mediavest Group revamped existing agency Spark to serve as a third competitive shop to both Starcom and Mediavest. Months later, Interpublic Group of Cos’ Mediabrands built media shop BPN from scratch to compete alongside Initiativeand UM. WPP’s Group M network already houses four shops, including Mediacom, Mindshare, MEC and Maxus.
Omnicom is the last holding company with fewer than three global media agencies, and both OMD and PHD tout crowded client rosters with business in nearly every marketing category. OMD works with retailers JCPenney, Toys “R” Us and Walgreens, as well as Apple, State Farm, PepsiCo, Visa, Wells Fargo, Clorox and McDonald’s. Sister shop PHD works with Gap, pharma giant GSK, Unilever and Starbucks.
Many agencies are often boxed out due to conflicts as they’re typically supporting an entire product portfolio, versus only one brand.
It’s not clear whether OMG will build from scratch or revamp an existing brand. If it chooses to revamp, it could revitalize Prometheus, a third media agency brand that spun off from OMD in 2005 and has been dormant for some time. When it launched, OMG shifted a few accounts to the new smaller shop. The Prometheus website is still live but “under construction.”
The fight for every marketing dollar is growing ever-harder for agencies. Omnicom’s second quarter earnings last week showed a modest profit increase to $289.5 million, up from $282.7 million for the same quarter in the prior year.
This story originally appeared in Advertising Age.
