Omnicom Group is considering the appointment of a lead negotiator to represent the $2.6 billion the holding company's agencies spend on national TV.
The move would be a significant step toward creation of a U.S. version of Omnicom's global media powerhouse, Optimum Media Direction Group. It would also pressure rival holding companies to speed up plans to centralize media operations in the U.S., as they already have in other parts of the globe.
GRUBBS IS TOP CANDIDATE
Daryl Simm, former media chief at Procter & Gamble Co. and the current worldwide president-CEO of OMD, is Omnicom's point person on media strategy. He is said to view Steve Grubbs, exec VP-director of national TV buying at BBDO Worldwide, New York, as the top candidate for the lead negotiator role.
Mr. Grubbs would go into the upfront market backed by the combined buying clout of BBDO; DDB Needham Worldwide; TBWA/Chiat/Day; Goodby, Silverstein & Partners; GSD&M; Martin/Williams; and Creative Media.
The executive would not actually negotiate deals for individual clients of the various agencies.
"It's more like this person would go to Fox, let's say, and tell them that OMD has X dollars to spend on the network," said one of the executives familiar with the plan. "Then the negotiator would say, 'OK. What kind of guidelines are we looking at in terms of rate increases, or decreases? What kind of a program mix?'
"Next, the individual agencies would negotiate on behalf of their clients. Then when everyone's done, but before the deals are closed, the lead negotiator would again get involved."
Asked about the appointment of Mr. Grubbs to such a role, Mr. Simm said, "We haven't made any decisions on that front."
Mr. Grubbs was traveling and could not be reached.
JWT, O&M ALLIANCE
Omnicom rival WPP Group's biggest U.S. agencies, J. Walter Thompson USA and Ogilvy & Mather Worldwide, formed a similar alliance for last year's upfront market. That alliance is run by a committee, not one person, although the agencies want to expand the venture. Outside the U.S., WPP's MindShare unit already combines the buying clout of its agency networks.
Interpublic Group of Cos., meanwhile, plans to fold some of its U.S. media operations into its new Western Initiative Media group.
As Mr. Simm and the Omnicom shops debate how to approach this year's upfront marketplace--when most of the commercial airtime is bought on national broadcast, cable and syndicated TV shows--they also grapple with the larger issue of how to approach media buying in the new millennium.
'EVOLVING LEVEL OF SERVICE'
"What we've been doing is exploring how we can provide an evolving level of service that responds to the environment we're dealing with: the fragmentation, more data, large and fewer media companies," Mr. Simm said. "We're evaluating a lot of options. We don't have a plan we've committed to or talked to clients about."
Another insider said, "It's a no-brainer to combine research functions and the like. The difficulty is the turf wars, the agency egos and the client conflicts in combining units."
For example, GSD&M, Austin, Texas, handles MasterCard International's media, while BBDO buys for Visa USA. And BBDO handles media planning for Pizza Hut, while DDB Needham oversees media planning and buying for most of McDonald's Corp.
Mr. Simm is said to be considering a few long-term scenarios.
In one, there would be three OMD media networks in the U.S.: one each for BBDO and DDB Needham, and one for the rest of the Omnicom agencies.
A variation of that plan would put the third network under the leadership of TBWA/Chiat/Day. Yet another plan would set up BBDO and DDB Needham media networks, with other agencies picking which one to join.
Copyright February 1999, Crain Communications Inc.