- OMD credits its account winning spree to the investment in its new operating system - Vision
- With innovation & creativity at the core of the agency's DNA, the area of focus at present is acquiring strategic talent
- Media agency business is transitioning to consultancy in addition to other traditional media services
For media agencies, the past year has been an interesting one. Some markets slowed down in pitching, while some became more active. Certain large businesses decided to segregate planning from buying and some, while continued with global and regional AORs, made exceptions for specific markets. The overall industry trends, combined with focussed investment in future-ready technology and talent, have augured very well for OMD Worldwide.
As the likes of Hasbro, Disney, Cigna, Wallgreens, Johnson & Johnson, HJ Heinz amongst others parked their businesses with the agency, any conversation around the losses – including that of Vodafone – was drowned.
Not surprising then that Mainardo de Nardis, CEO, OMD Worldwide looks pleased, when asked about the agency’s performance in the last 12 months. “We have done incredibly well. There were a few losses — Vodafone was with us for many years, so it was one of the marriages that came to an end and we all moved on. But we made up for any loss with the new business wins in every region – it has been a great year,” he remarks in a conversation with DMA.
|From OMD Worldwide’s Factsheet|
|OMD Worldwide employees: 10,300+|
|% growth from 2011: 10%|
|Source: 2012 RECMA Overall Activity Report, published August 2, 2013|
|Key wins in the last 12 months|
|Global: CIGNA, Hasbro, Cisco, HJ Heinz, Coach|
|China: CGB, Shenzen Mobile, Legends Wine, Xiwang Food|
|US: Disney, PetSmart, Johnson & Johnson, Walgreens, Experian|
|UK & Europe: TSB, SSE, Arla, Sisal|
The ‘Vision’ that delivers
For Mr de Nardis, the agency’s account winning spree can be credited significantly to the investment in its new operating system, Vision. “Vision has been a core part in every single pitch. This is our way of ensuring that are delivering like a network, and not patchwork. People are sharing technology, ideas map and everything else on a brand in the correct manner. Sharing or generating insights cannot be done by phone or email. With VIsion, the entire OMD team, across regions, has the same technology and sees what is happening in different markets,” he comments.
OMD’s proprietary operating system Vision helps identifies business challenges in very complex marketplaces, more tightly linking the role of each media to business goals. By better understanding the unique category behaviours of consumers, Vision will identify the most relevant ways to drive demand and desire against each audience. It encompasses a disciplined, three-phase, 10-step process that was designed in synchronicity with the agency’s core tenets of Insights, Ideas and Results. The framework allows for identification and extraction of valuable insights; the ability to share insights across all markets—and crucially, the quality control that is needed to better action an effective global strategic approach.
Amongst the regions that fared well for the agency in the last year, United States topped the list not only in winning US-centric businesses but also global businesses that are headquartered in the US. Specific to Asia Pacific, Mr de Nardis explains that the slowdown in markets such as India and China is yet to make any impact on the agency. He says, “If I had to compare India and China, we have been growing lower in India only because there have been lesser pitches. Jas (Jasmin Sohrabji, CEO, Omnicom Media Group Southeast Asia) and her team have been doing a fantastic job. China is not the same. It is constantly in movement and every single day, there is a new pitch or opportunity. In both markets, we are growing faster than market rate and as long as we are growing at double the market rate, I am happy.”
The move to adopting its operating system, Vision, across markets was one of the key elements on the OMD agenda this year. Mr de Nardis sees it as one development that has been transformational for the agency.
While the move to Vision has happened across markets, Mr de Nardis states that Asia is further ahead of some of other regions, and that soon languages such as Mandarin and Spanish too would be introduced for Vision.
The transition to consultancy
Innovation and creativity form the core of OMD’s DNA according to the agency’s Global Chief. The layer that he now wants his business managers to focus on is bringing in diversified and strategic talent that will help the agency grow into the area of consultancy.
“The industry is witnessing some very clear growth trends,” observes Mr de Nardis. According to him, the business is finally getting to a point where everything is digital. It doesn’t have to be referred to as a separate silo anymore. “Our clients care about opportunities to connect their brands to the right customers in an engaging way that drives business results. Hence, an area of growth we are seeing is around analysis and consultancy. It is not just delivering the communication plan but understanding where the demand comes from. There is immense knowledge in media agencies and we measure everything. We have to help our clients use this data and knowledge to improve the performance for their brands,” he remarks, and adds, “We are using data for information in a much more strategic way. Our challenge over the next two years is to have the right talent that can have these strategic conversations and help us transition into the consultancy space.”
Five Qs to Mainardo de Nardis on technology transforming media agency business
Vision is perhaps one of the examples where technology has made a visible impact on the agency. Would you agree?
Absolutely. Technology is transforming the business in multiple ways. It helps to communicate internally and with clients. Vision is a way where over 10,000 people work on the same technology, across the world, across every office and each of them have all the information on the same client – think of it as sharing the same insight, demand map, ideas calendar and all backed by the same data. This is possible only now – we couldn’t have done it five years ago. In terms of investment, technology would have been impossible to manage with the margins that we have in our business. Vision has transformed the way we work with each other and with our clients.
What are some of the other areas where we see technology making an impact?
Another area where technology is impacting our business is enabling capacity to manage data and making it relevant to the decision making process. The reason why data is owned by media agencies and not by the other disciplines is that we have invested in the management of data and we make data relevant by managing it, distilling it and making it available at the moment in which decision has to be taken – whether offline or online. And the third area would be programmatic – using data to influence, perfect and optimise our buying in a way that cannot be done manually. Technology is helping us to do things better – more precisely, and effectively to save money.
Despite all these changes, why is it that marketers continue have the perception that media agencies have not evolved enough?
You are partially right but it is difficult to generalise clients. Some clients understand perfectly well what they are buying from their agencies; other clients find it little bit the same. I would say that the fault is equal. The first half must be our fault because it means that we have not focussed enough in explaining the point of difference to our clients. But the other is also from some clients who have not invested enough to understand what is happening, and who are not open to innovation. Most of the client wins we had this year were based on buying something different, innovative and new. The Hasbro win was all based on managing data, technology, Vision and together driving marketing communication in a global operation. It was a highly sophisticated and complex requirement and they could see the difference.
Could it also be because agency revenue models are still the same?
Historically, we have had two business models – commission and/or fee. Both systems are wrong – commission is based on media buying and that is only part of the work we do. The other one is just selling hours which has nothing to do with creating value for the brands that we represent. Over the last two to three years, there has been a lot more incentive, pay for performance, so an element of the fee is linked to what we deliver for our clients. What is still missing is a business currency to determine success, on which clients can move more towards pay for performance because we should be rewarded more if we can achieve something extraordinary. Today that is not fully recognised. When that will happen we would be able to make more investment in our business, there would be more competition to drive effective business performance for our clients, and it would help us to employ and pay the right talent. As an industry, we need to agree more on the business KPIs, where we can measure performance. Today, most agencies do it on some clients but it is still on an ad hoc basis.
Can technology help you in reassessing agency business models?
Technology is helping us already. It helps us to measure performance to really understand how a specific plan has helped to raise power of a brand, create demand, achieve sales or whatever the business objective of that brand was. The use of technology allows us to measure more than the fluffy marketing KPIs and what impact has it had on that brand in terms of business results. And that is important.