OMD wrestles with its three-way calling

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Optimum Media Direction USA was christened in the recent upfront TV selling season. It was the first time Omnicom Group's unbundled media agency waded out into the marketplace on its own. Dan Rank, director of OMD USA, says the agency brokered about 50 deals with broadcasters for 39 of its clients, spending $2 billion, which is half of the agency's billings.

OMD originally came together in Europe in 1996 as a combination of the media buying services of Omnicom's three agency networks, BBDO Worldwide, DDB Worldwide Communications Group and TBWA Worldwide. The media combine then expanded its operations into Asia, Australia and Canada before finally opening up for business in the U.S. in February, guided by DarylSimm, CEO of Omnicom Media Group.

Unlike some of the other unbundled media giants such as WPP Group's MindShare and Interpublic Group of Cos.' Initiative Media Worldwide,OMD management decided to avoid the messy job of gobbling up the planning departments of its constituent agencies and has focused on pooling together only the media buying functions. The grouping won't include BBDO's Local Media Network or the media services of Omnicom's Goodby, Silverstein & Partners, San Francisco.

According to Advertising Age's list of top media specialist companies, OMD USA ranked fifth in the U.S. with more than $4 billion in billings and third worldwide with almost $14 billion in billings. OMD USA claims a total of 87 clients and 150 national buyers.

Steve Grubbs, former exec VP-national TV buying for BBDO, is now managing partner-CEO of OMD USA. Mr. Rank, previously director of TV and radio at DDB, is director, and Annette Cerbone, previously director of corporate broadcast and research at TBWA/Chiat/Day, is managing partner, local broadcast. Guy McCarter, former head of entertainment marketing at BBDO, has been reassigned to senior VP-director of entertainment marketing, while Natalie Swed Stone, former senior-VP network radio manager at New York-based Young & Rubicam's Media Edge, has been named managing partner and director of national radio services

These five executives sat down with AA Reporter Richard Linnett to discuss the complexities and innovations of bringing together the media concern.

Advertising Age: Why and how did you create OMD USA?

Steve Grubbs: We created something that's a little bit unique, it's not a MindShare. It's not an Initiative.We created it in response to the competitive forces in the marketplace. And while we were aggressively creating OMD in Asia and in Europe, we were far behind in the U.S. Unlike virtually every other operation out there, we've combined not two, but three agencies. Combining some of the assets of the three agencies, you can afford to develop resources that each individual agency on its own could not necessarily afford.

The key here is flexibility. We have really four legs to OMD in the U.S. We have the DDB/OMD leg, the TBWA/OMD leg, the BBDO/

OMD leg and an OMD/USA leg. Most of the OMD employees are national and local broadcast buyers. Some are researchers. Some are radio buyers.

Those buyers will continue to be housed within their respective agencies, but they're reporting to the OMD management structure. In a few months, we will be located at 1270 Avenue of the Americas; our central location is within a three-block radius of our three agencies. Our goal is to develop any media resource, any media service for our clients, and we'll either be able to provide it or we'll be able to create a joint venture or a partnership.

AA: How does Guy McCarter fit in?

Guy McCarter: For the last few years I've had a unit here called Entertainment Marketing at BBDO. And from this little group we do a whole variety of things from programming deals to integrated sponsorship deals to event sponsorship deals to theatrical tie-ins to product placement to cross promotional deals with media companies to being a resource for implementing added value opportu- nities to TV buys.

There's a real appetite for going beyond spots and dots, as Steve Grubbs likes to say, to being more integrated in an entertainment product.

I'm known as an entry point from the West Coast for ideas that are programming opportunities or sponsorship opportunities that have potential for BBDO and now for OMD advertisers. So a lot of the talent agencies and the management agencies and the record labels know that there are ways to bring in tour sponsorships, for example, directly into the agency. So we're a good place to look at opportunities beyond traditional media buys.

AA: Can you tell me about a recent job that you worked on?

Mr. McCarter: Discovery Channel came through here looking for a sponsor for "Shark Week." [Discovery Channel] wanted to keep it fresh for viewers, so it had this idea of doing a "3-D Shark Week." But [Discovery Channel] wanted to partner up with a sponsor, because [it] had to produce all these 3-D glasses and get the word out.

We put together [our client] LensCrafters and "3-D Shark Week" and ultimately we were able to make a deal where LensCrafters committed to a significant sponsorship, which will happen in August.

AA: Annette, can you offer us some insight into the local media buying operation?

Annette Cerbone: Yes, I'm going to be overseeing the local buying for only two of the three agencies -- TBWA and DDB. BBDO will not be part of the operation. TBWA and DDB/OMD are [billing] roughly $1 billion in TV and radio and have 120 employees.

Regional buying business is at both agencies. We have two offices in New York, Los Angeles [and] Chicago and one in Seattle, San Francisco, Dallas, Atlanta and Washington.

AA: Natalie, can you talk about the advantages of consolidating the radio buying operations?Natalie Swed Stone: Network radio cries out for some quality, and it cries out for some expertise and some professionalism. I was on the sales side [at ABC Radio Networks and MediaAmerica], and I saw what was happening all over the country. It frustrated me, as a former buyer, that the wrong things were being done. There was no consistency.

Omnicom came to the table saying, "We value every one of our clients, we want to do a great job for all of them, and we want it done in one place." And that's what we did. And I just wanted to add that we're available to any and all of the Omnicom agencies that want to work with us.

AA: Can you evaluate OMD's effectiveness during the last upfront season?

Dan Rank: We spoke with one voice, unlike some of our competitors who were all dispersed. In the case of one competitor, the people from L.A. didn't come to New York for the week. There's a big difference in the way OMD was set up. We have one clear leader for OMD [Steve Grubbs], and we have one clear leader in each of the disciplines. And the reality is in the upfront you need someone who is empowered in any buying decision, you need one person who's empowered to make the ultimate call. As Steve started this, we spent a lot of time setting up OMD and asking, "What is the right structure? Who's doing what? Who's responsible for what?" And at this upfront, that hard work really paid off because, while we sought everyone's input, there was a clear structure and a clear leader.

AA: Which agency doesn't have a clear leader?

Mr. Rank: Well, Initiative Media has a New York division, an L.A. division and Botway. The three of them came together for the upfront with no clear leader. And when you have no clear leader, it's pretty easy to get confused.

AA: OMD as a unit has leverage in its size. Does that do anything for you in terms of the prices that you get?

Mr. Rank: People define leverage -- clout -- as having lots of money. The reality is, most buyers and sellers would acknowledge that they have clout. It's more complicated than just having lots of money. When you have 39 clients involved in the upfront, as we did, that's leverage. Some of them were small clients, so it doesn't have to be dollar volume so much as 39 pieces of business. Somebody's interested in some of those clients. I don't care how strong the market is, there are clients there that are very appealing to the networks. That's leverage.

With 150 people in the national buying group, we have more brain power, more brain leverage. That's power in the marketplace. People like to look at dollar volume and say, "That's the gold standard," because it's measurable, and we're in media, we like measurable things. You gain leverage in a whole lot of ways, other than just strictly dollar volume. We happen to have a lot of dollar volume, but we have a whole lot of other things, too. It's very fashionable this year to say, "Well, no one needed money, the market was robust." We bring a lot more than just dollar goals.

AA: You also bring brands that have a certain value, don't they?

Mr. Rank: There's no question about it. The networks really want plenty of our clients on their air. I don't want to say which clients they don't want on the air, but you can imagine that some products are more desirable than others. So there's lots of leverage besides dollar volume.

AA: This year was really a seller's market. The prices were high, and the networks were getting what they were asking, right?

Mr. Rank: I've been told that some other agencies paid high prices.

Everybody has a weak point. NBC can't sell daytime. CBS can't sell early morning. ABC can't sell late night. So everybody has a weak point. Everybody has something that they're nervous about and uptight about. With 87 clients and 39 upfronts, we can be responsive to people's needs. You help me here, I'll help you there.

Ms. Swed Stone: This was a bad year in terms of local political races, and we have the elections coming up. A political year is generally not as good for advertisers because it reduces the supply in the market.

AA: Did radio benefit from the tighter broadcast market?

Ms. Swed Stone: There are clients, such as Procter & Gamble Co., talking about doing something to avoid paying the high cost year after year. [They are] looking at alternative media, some of which are radio, out of home, print and the Internet.

AA: How do you handle interactive business?

Mr. Grubbs: Each agency has an interactive arm. OMD will probably form some kind of partnership or joint venture with one of Omnicom's existing Internet companies. We are looking at a couple of possibilities right now for either media-only business that we might win, or for clients at the existing agencies that, for whatever reason, may not be utilizing that agency's interactive service.

AA: It will be a joint venture? With @tmosphere maybe?

Mr. Grubbs: Well, @tmosphere is a BBDO subsidiary, and there's DDB Digital.

It may be difficult for us to align ourselves with one of those. It will probably go with a Communicade company. Omnicom Group has investments in about 32 Internet companies. So we might partner with one of them.

AA: Media players are supposed to be the stars of the new advertising. Some people suggest that the day is coming in which clients are going to talk to the media people first, before they talk to the creative people.

Mr. Grubbs: This idea has been around for a couple years now.

Ms. Cerbone: The emphasis is still on creative. How do you break through the clutter? How do you break through the noise?

Mr. Grubbs: The business of buying media hasn't changed that much, but the media itself and the technology has so changed our world and impacted it, far more so than the creative end.

Ms. Swed Stone: You won't get from us what you get from the creatives. Integration is the best way to go. But it's got to be creative and media together and that we are only a part of the process, even though we're a very large organization, we're only part of the process.

We're still putting something on the air and that thing better be good.

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