McDonald's turns to OMD for global media

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McDonald's move to consolidate its $1.2 billion global media assignment at Omnicom Group's OMD without a review is a blow to Publicis Groupe's media agencies, Starcom and Zenith Optimedia, which appear to be the main casualties of the change.

The consolidation, first reported on on Nov. 25, is widely expected to be announced today by Larry Light, McDonald's exec VP-global chief marketing officer. ( QwikFIND aap19g)

At press time, neither McDonald's nor OMD had officially confirmed the move. However, several executives close to the talks said it was true, adding that the change is consistent with what McDonald's has attempted to do with media. Earlier this year, the company indicated that it was looking to standardize media buying and planning around the globe.

An executive familiar with the situation said OMD began putting the deal together in the spring. In the U.S., OMD currently handles all adult media, Hispanic and some online duties while Starcom handles youth media and other digital assignments.

retain some business

Despite the consolidation, Starcom might retain some local business, according to one executive. The consolidation is not expected to affect the 1,300 to 1,500 local franchisees, which use around 20 separate agencies.

A spokeswoman for OMD referred calls to the fast-food company. In a statement, issued on Nov. 25, McDonald's said: "You can expect to hear more from us on our new marketing leadership initiatives in the future. Until then, anything else is pure speculation." As of Nov. 26, the company did not have any change to that statement, but is widely expected to provide more details.

Dick Roth, president of Roth Associates, New York, who has helped marketers with global consolidations, speculated on McDonald's motives saying: "They are obviously looking at standardizing their communications practices across all geographies. The other reason for consolidation is the analytical tools. It is better to have one answer, or it can get confusing." Mr. Roth added that cost might have been another factor. "Why pay three to four different media agencies when you can have one? There's bound to be duplication."

Outside of the U.S., OMD handles media in Europe's biggest market, Germany, as well as Spain, Austria and Netherlands. Outside of Europe, OMD handles Hong Kong, southern China, Taiwan, Australia, New Zealand, India and Central America.

global breakdown

Publicis Groupe's Starcom works for the food giant in the U.K., France, Italy, Indonesia, Singapore, Mexico and Malaysia; sibling network Zenith Optimedia handles in Northern China while Grey Global Group's MediaCom represents McDonald's in Switzerland and other Nordic markets. Dentsu and Hakuhodo handle Japanese media. (See chart, P. 3.) A Starcom representative refused to comment on the consolidation referring calls to McDonald's. Last week, Starcom won the highly sought after $350 million Coca-Cola Co. media account. (See story, P. 34.)

McDonald's ranked eighteenth in Advertising Age's report on top global marketers, spending in 2002 was $1.187 billion worldwide, including $574 million in U.S., $353 million in Europe, and $181 million in Asia.

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