Omnicom Group this week will announce the global launch of two distinct, and competitive, media networks: Optimum Media Direction and PhD.
Although the worldwide formation of OMD has been anticipated, the launch of the global PhD media unit comes as a surprise.
PhD rolls up Omnicom's independent media shops, including Creative Media and Advanswers in the U.S.; Canada's HYPN; and the U.K.'s New PhD. The unit takes its name from New PhD, which is already well-established in Europe. Advanswers and Creative Media will now work together in the areas of media buying and research.
OMD--which combines the media buying operations of Omnicom's BBDO Worldwide, DDB Worldwide and TBWA Worldwide agencies--formally completes its global expansion this week by opening shop in the U.S. OMD was formed in Europe in 1996 and currently operates in 30 countries. On a global basis, OMD has about $15 billion in buying clout, while PhD has an estimated $2 billion in billings.
Daryl Simm, CEO of Omnicom Media Group, said Omnicom formed the two units in order to better take advantage of the holding company's existing capabilities--the size and media clout of its Big 3 agencies, and the entrepreneurial nature of its disparate media specialists. The formation of two units also enables the Omnicom units to vie for competing clients.
"It's the prospect of two distinct selling propositions in the marketplace," said Mr. Simm. "The two units have distinct personalities."
Mr. Simm said Omnicom management did briefly consider uniting all its media capabilities in a single cohesive unit, but opted for a duo to "avoid the risk of creating a homogeneous media service."
Omnicom is the latest holding company to join in on the industry's media combination frenzy. Recently formed agency holding company BDM is poised to combine its Leo Group's Starcom Worldwide operations with MacManus Group's MediaVest, forming a $16.5 billion buying behemoth.
The BDM media unit would lead in U.S. clout, boasting billings of $5.4 billion.
WPP Group is also in the midst of completing its global media entity--MindShare--through the combination of Ogilvy & Mather Worldwide's media units with J. Walter Thompson Co.'s media entities. That unit would have $10.1 billion in global media billings.
David Pattison, co-founder and CEO of the New PhD, becomes CEO of the PhD media network. Steve Grubbs, previously exec VP-national TV buying for BBDO, New York, becomes CEO of OMD USA.
His top two lieutenants are Dan Rank, formerly director of TV and radio for DDB's OMD Media, New York, and Annette Cerbone, previously director of corporate broadcast and research at TBWA/Chiat/Day, New York. Mr. Rank will oversee OMD's national broadcast group, while Ms. Cerbone will be responsible for its local broadcast operations; both will be managing partners. Mr. Grubbs is also expected to name a top executive to head Optimum's U.S. research operations. OMD will have $4.1 billion in U.S. billings.
The national TV buyers of the three agencies will now become employees of OMD, as will the local buyers of DDB and TBWA/
Chiat/Day. BBDO's local media network, which mainly services DaimlerChrysler, will remain a separate entity. Mr. Grubbs said they never considered folding in DaimlerChrysler's media. One reason to separate the local buying is that OMD handles Nissan North America.
CHANGES FOR 250
All media planning staffers of the agencies will continue as employees of their current shops. All told, an estimated 250 U.S. staffers will change their reporting structure. The bulk of OMD's media buying employees will remain housed in their respective agencies. However, a new office will be set up in New York for top OMD management and select research personnel.
The plan to expand OMD has been in the works for 18 months, according to Mr. Grubbs. Many kinks had to be worked out in the process, including getting feedback from 90 clients. For the last several months, the OMD USA top management trio has traveled across the U.S. to meet with existing clients and get their feedback.
"For the first six months, it was like the Hillary Clinton listening tour," joked Mr. Rank, adding, "We didn't want to cram anything down our clients' throats."
Interestingly, the newly formed OMD U.S. structure currently services some conflicting clients, such as McDonald's Corp. and Taco Bell, as well as Apple Computer and Compaq Computer Corp.
"We resolved conflicts and set up fire walls," said Mr. Grubbs.
Omnicom's smaller-billing agencies, such as Goodby, Silverstein & Partners, San Francisco; GSD&M, Austin, Texas; and Martin/Williams, Minneapolis, will keep their media planning and buying contained for now.
However, Mr. Simm noted that Omnicom's media structure will "continue to evolve," adding, "our aim is to build our businesses."
Copyright February 2000, Crain Communications Inc.