- Omnicom growth indicators continue in the right direction despite calling off Publicis merger
- Technology-led advertising, such as programmatic, a big area of growth in media for Omnicom
- Complexity is the friend of our business, it is where our professionals excel, says Omnicom Chief
- Partnerships with tech companies, including social media platforms, high on Omnicom radar
- Investment in growth markets such as India continue to be priority
“We dated, though in a very traditional sense; most of the time accompanied by a proper escort in the form of an attorney or someone of similar stature,” reflects John Wren, CEO, Omnicom Group, as he speaks on what one would suspect is not a very comfortable subject of the terminated merger proposal with Publicis Groupe. Mr Wren however runs a company that generates over USD 14 billion in revenues a year – it would take more than a failed conversation, even if it was of an industry-changing scale, for him to flinch. He admits that the marriage with Publicis would have achieved a desired goal of growth speedier than going down the road alone. But without the support of a partner, and after factoring in the investment of time and money in making the union happen, Omnicom has continued to be on its growth trajectory.
The proof comes in the numbers. While one indicator would be growth that the company witnessed in its first quarter earnings for 2014, the more interesting story is reflective in Omnicom’s stock performance. Post the announcement of the proposed merger in July 2013, Omnicom’s stock began to scale up, towards the end of the year. The momentum continued till Q1 2014. The period from March to May 2014 had begun to record a decline. One would have expected that after the merger was called off in May 2014, Omnicom’s stock would have settled somewhere in the pre-merger-conversation mark but the last two months have only seen the numbers climb up again. When asked what he reads from this, Mr Wren replies, “Praise God! You would have to ask someone closer to Wall Street for the reason but for us, we have continued to win big businesses, and our employees are happy and moving forward — we are on track.”
Business, as usual
One of the must-ask questions directed at Mr Wren in the last couple of months is what are the plans now given that the merger is called off. “During the merger conversation, the business objectives for our operating units never changed. Though we execute differently, all of us – whether it is Publicis, us or any of our competitors – see business in a particular direction. We had not gone far enough in the Publicis discussions to disclose personal details. Our operating companies, other than thinking about what the future would be, were never distracted or required to dedicate time with their siblings. The principles we are driving at are the same. The deal would have shortened the path to accomplishing it, since in some areas size does matter, but in others, being nimble matters. The fact that it is not happening does not change the principles of what we are doing,” states Mr Wren.
He explains that Omnicom did not halt any investments, it doubled down on its employee education development and satisfaction programmes to stay the course. “The deal distracted my attention and some of the other Omnicom executives but I have a great team — they are not the type of folks who would sit around to take their instructions from me. They know, and are working towards achieving, what we have set out to achieve, and that was never compromised,” he remarks.
Omnicom’s philosophy in its approach towards the changing media landscape stems from the fact that the impact of technology (leading to the growth of digital, precision targeting, role of data…), is inherent in the core of its overall business. For that reason, the company does not distinguish digital from other disciplines. “The substance of what we run is to make everything digital, and we work very hard at it,” says Mr Wren.
Technology, Talent… Omnicom’s focus areas
One of most exciting areas for Mr Wren is the change in the media business, in terms of digital and its promise with measurability and technology-led advertising like programmatic trading. “We have created a platform underneath all of Omnicom to make sure that our investment is in line with the market, entering partnership agreements with technology companies and ensuring that we are utilising these relationships for the benefit of our clients and our businesses,” informs Mr Wren. Omnicom has over 100 long-term partnership agreements, including with social media platforms.
The holding company has not only created stacks of data collection, predictive analysis and user-friendly information but is also socialising this with the creative professionals, and other disciplines, that don’t necessarily engage with details such as where a consumer buys from or what they do. The platform allows the creative or the planning person in an agency to enrich the database for the benefit of others. Many new groups in the company are already using this platform, turning it into a dynamic base, potent with learnings from different markets and disciplines.
“We bring value in insights, and in creating digital content and messaging that includes identifying the right consumer, right place, right time and right context. The demand for this will only grow. Conceptually anyone can get it, but it eventually comes down to how well you execute it, and we are damn good at that,” comments Mr Wren.
Omnicom also sees its specialty businesses that include non-advertising practices such as public relations and healthcare that would continue to attract more of the advertiser’s spends in the future. “PR companies have reinvented themselves in the last four years, and are extraordinarily capable in setting up programmes in helping clients respond to trends that they see developing. Healthcare, similarly, has always been very important and is becoming increasingly so. Clients are more focussed in delivering their messages across every possible channel. The content development of this industry category is also growing very fast. The only limitation, if there is one, on the growth of that is finding qualified talent,” Mr Wren observes.
The other area for the company to grow is to replicate the depth of its resources that it sees in markets such as United States and in the West, in the other markets around the world. “The basic offerings are in place. We are exporting, buying and developing some of these important areas but it continues to be a huge opportunity for growth,” the Chief of Omnicom divulges, and adds, “The thing about talent and people is that you cannot ever have enough of good talent. You cannot have done enough of good training or educated enough of them. Talent today can come from anywhere, you really just want inquisitive, smart people who can think and adjust to changing environment.”
The impact of technology and acquiring talent are the two principle areas that will yield the most for Omnicom in the near future.
The Asia Pacific agenda
Asia Pacific had posed to be one of the tougher markets for Omnicom. Efforts of the last few years however are reaping results. One indicator of that is seen in the Effie Effectiveness Index 2014 that declared Omnicom to be the most effective holding company group ahead of WPP in the region. WPP led the index globally. Omnicom’s high investment in markets such as India by organically growing its media business Omnicom Media Group and by acquiring assets such as Mudra (which now is DDB Mudra Group) or more recently digital assets including 22 Feet Tribal and MagnonTBWA is also yielding results.
PHD India in fact scored highest in the region, in the media category, at the recently concluded Cannes Lions International Festival of Creativity. “India is a very important market for us. Omnicom’s major entities in India – Omnicom Media Group, DDB Mudra Group, BBDO, TBWA, Ketchum Sampark, CPM, FleishmanHillard and Flamingo – in a relatively short time period have been extremely successful in attracting the best talent and growing their businesses,” reiterates Mr Wren.
“Today these agencies manage some of the largest multinationals and India brands in the country. The fact that the recently launched PHD India won two gold Cannes Media Lions for Unilever is a testament to the incredible talent we have been able to attract in the market. We will continue to make investments in India to diversify our service offerings,” he adds.
Publicis may become a subject that has brought its own learnings to Omnicom – it may still remain a subject that is revisited but for now Omnicom has its road clear on what lies ahead, and technology companies should be encouraged for the interest that the holding company has shown on this, still nascent, side of the business.
Five Qs to John Wren on the impact of technology on marketing & advertising
Technology has complicated the advertising & marketing ecosystem. How do you see this becoming simpler for the marketer?
Just by the increase in the number of advertising tech companies, I don’t think it is getting any simpler but complexity is the friend of our business. Where we make primary contribution is in developing big ideas that can travel across virtually any channel. Because of the proliferation of devices such as mobile and tablets and such, you have the right channel, but you have to also ensure the right message, at the right time and in the right context. Complexity is where our professionals excel. That is where they can add value to CMOs and CIOs who have the budgets and innumerable choices to make on how to reach the consumer in effective ways.
Simplifying the ecosystem is the agency’s role but marketers still talk about the growing complexity of structures; do you think agencies are doing this role well?
That is the endeavour. One area where you see it is in servicing the large, multinational marketer. The day-to-day collaboration between our various specialists is absolutely required and is being done in a very formal manner today. People are getting used to communicating with each other even before the client asks them to coordinate. We have a dedicated resource establishing our own protocols in encouraging collaboration on behalf of the client.
Would you like to elaborate on how this is developing at Omnicom?
The form that this eventually takes depends on how the clients organise and what their needs are. To give you an example, the PR department can no longer sit in its corner and not speak to the brand development company, who has to also speak to the shopper marketing expertise. The silos that these disciplines once operated in are breaking. We have at least 20 large marketers, where we are doing a significant part of their overall marketing needs, where different operating companies work with each other.
You mentioned that you are optimistic on the changes in the media side. What is particularly standing out?
The specific trend in media, and increasingly this will only grow, is the promise of doing things in the programmatic fashion. The technology has been out there and is finally at the cusp of where it is beginning to deliver. We are collecting information, able to access and buy inventory and this has become sophisticated enough to finally deliver for the clients. Content has a role to play in this as well, so technology is necessarily an enabler for effectively communicating for a brand.
Yet programmatic trading is still in single digit spends even for digital media right now. What is holding it back?
What we haven’t seen yet is the dawn of the mobile in its true power. The proliferation of the device will derive a much more rapid pace in budgets in the future. Also, as a channel proves its effectiveness and ROI, companies and management get comfortable and increase budget. People are discovering programmatic only now. The budgets towards programmatic in digital media were not measurable two years ago – today we are already talking about programmatic in non digital media – that is how fast it is growing.