OMNICOM MULLS MEDIA BUYING UNIT;ENTITY WOULD SERVE NON-ALIGNED AGENCIES, RESOLVE CLIENT CONFLICTS

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Omnicom Group is seriously considering purchasing or starting up an independent media buying service in the U.S., with a decision expected before summer.

The independent would serve Omnicom's non-aligned agencies, including Goodby, Silverstein & Partners, San Francisco; Merkley Newman Harty, New York; Ross Roy Communications, Bloomfield Hills, Mich.; and Ketchum Communications, Pittsburgh.

The buying service would also take clients directed to it from Omnicom's networked shops- DDB Needham Worldwide, BBDO Worldwide and TBWA Chiat/Day-when one of those agencies couldn't handle media chores because of conflicts.

There had been some internal discussion of eliminating media at TBWA Chiat/Day and directing all its clients into the proposed media independent, but the idea was quickly shot down, said insiders at various Omnicom agencies.

Fred Meyer, Omnicom's chief financial officer, confirmed "discussions are taking place" about buying or starting a media independent.

POSSIBLE BUYOUT CANDIDATES

Two independents that Omnicom would likely look at are Creative Media and Corinthian Media, both New York, insiders say.

"They are not considering just anybody. It has to be a clean shop that would also make a good fit, culturally, with Omnicom," said one media executive familiar with the plan. One potential sticking point is the price Omnicom would have to pay for an existing independent.

"The independents want premium prices, and the company doesn't want to pay retail," the media executive said. At a premium, Creative Media would probably go for $8 million to $12 million, the smaller Corinthian for $4 million to $6 million. Creative Media wouldn't comment; Corinthian did not return phone calls.

"In the end," said the media executive, "it may be cheaper to hire some well-respected media executives and start from scratch."

Omnicom President-CEO Bruce Crawford said 14 months ago he was going to examine the company's media options in the U.S. The decision to closely scrutinize media buying services was made last fall, insiders said.

AN INSIDE LOOK

Mr. Crawford has gotten an inside look at how a media independent operates in Europe because he sits on the board of the French giant Carat Group, in whose parent, Aegis Group, Omnicom has a 9% stake.

If Omnicom, the world's No. 3 ad agency holding company, buys or starts a media independent it will be following in the footsteps of Interpublic Group of Cos., which purchased the nation's largest media independent, Western International Media, for about $55 million in 1994. But Omnicom's strategy differs significantly from Interpublic's, insiders say.

"Interpublic bought Western because they liked its business," one agency manager said. "Omnicom is looking for an independent so it can steer media to it from its existing shops, primarily the non-aligned ones. It would be full disclosure, as opposed to Western's non-disclosure policy, and would not be burdened with mostly retail accounts, like most buying services are. They want the biggest clients, the Fortune 500 types, to be comfortable in such a media environment."

SFM WOULD LOSE OUT

One big loser in an Omnicom-owned media independent would be SFM Media, which buys media for a number of Goodby clients. SFM is now the largest independent not owned by a major advertising holding company, but it is considered too pricey and not a good fit culturally for Omnicom, media executives say.

Omnicom's scramble to examine the independent media option has already affected one client-Acura, at Ketchum Advertising, Los Angeles. Acura parent American Honda Motor Co. is evaluating media buying for both its Acura and Honda divisions; the latter is handled by non-Omnicom shop Rubin Postaer & Associates, Santa Monica, Calif.

America Honda has extended an evaluation of its media buying by consultant Herb Zeltner so Mr. Zeltner can study more options from Omnicom, including a centralized Omnicom media agency.

"Obviously, with Omnicom recently buying Ketchum, that may put one or more [media] scenarios on the table, but that in no way gives them a leg up or a leg down," said Eric Conn, American Honda senior manager of automotive advertising.

Mr. Conn hired Mr. Zeltner to come up with a range of options, likely including consolidating at an existing agency or at Omnicom, splitting assignments in a new way or leaving as is.

HONDA SEEKS `3-WAY WIN'

"Whatever we do has to be good for Honda, and it has to be good for Ketchum and it has to be good for Rubin Postaer," he said. "I need good advertising. The most important thing is the creative and the service to the account. It has to be a three-way win before I'm going to proceed. We need these agencies healthy for our success.

"Omnicom may have the answer to all the world's problems, but if it takes [President-CEO Gerrold] Rubin to his knees, we're not interested."

Bradley Johnson contributed to this story.

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