Cingular Wireless decided in March to move about 60% of its budget-including strategic planning and broadcast duties-to WPP Group's Mediaedge:cia.
The loss of the juiciest part of a $1 billion media budget hurt plenty, but what added extra sting was the timing: The decision came a week before OMD's first North American management conference.
At the meeting, a Native American culture-themed gathering in Scottsdale, Ariz., OMD North America CEO Page Thompson decided to take up the Cingular defeat head-on after delivering his initial remarks. What he saw in the 200 or so gathered there was not fear or blame, but instead an attitude of confidence and cooperation. "It was not `You've got to fix this or you've got to do this,' " he said recently. "It was more an attitude of `How can I help? or `How can I push the envelope?"'
To say that OMD rebounded would be an understatement.
Over the next nine months, the Omnicom Group-owned agency added about $1.4 billion in new billings, prevailing in some of the year's major pitches including Bank of America and Lowe's and picking up brands like eBay, Hilton Hotels, American Century Investments and AARP along the way.
The agency also successfully established Prometheus, a Chicago-based shop for conflict and transactional business that's already had some new-business strides of its own and is now opening a New York office.
And perhaps most impressively, it continued to expand its research capabilities and is showing it's become a strong partner for the brave new digital world.
"It was the year OMD USA came of age," says Joe Uva, President-CEO of OMD Worldwide. "It was the year all the things we invested in from a capabilities, process, human capital and tools standpoint all came together."
And it did so quickly, especially if you consider that improving research and creativity were part of a gauntlet thrown by Mr. Thompson during a road show at the end of 2004.
In the estimation of both Mr. Thompson and his boss, the U.S. region had been lagging the rest of the world in these departments. Expanded into a full-service media agency in 2001, OMD rather quickly established itself as a global force, performing at a high level both in new-business pitches and in award shows for creative media across a number of regions.
"Since 2002, we have been a leader in breakthrough thinking and innovation from a planning and execution standpoint," says Mr. Uva. "But the U.S., had sporadic success, quite frankly, and the work we did for a few clients was outstanding, but we weren't delivering it on a consistent basis."
To see the fruits of these improvements, one could look no further than the shop's new-business success.
While naysayers contend that performance has much to do with the success of Omnicom's strong creative agencies, especially BBDO, Mr. Thompson says that overlooks the scrutiny now given to media in virtually every bundled pitch.
He made five trips to Lowe's headquarters during that review; during the last he was alone with five marketing executives. BofA demonstrated the same rigor. "This isn't 10 minutes given to media at the end of the pitch," he says. "They're really looking under the hood making sure the media operation is the best there is."
Maybe the best example of that ambition to innovate is OMD Next, a research program for emerging media for which the agency has signed up a dozen or so of its biggest clients.
Marketers like Visa, FedEx, McDonald's and JCPenney are investing in a fund that will give them both generic and proprietary research on technological developments in media like DVRs, video-on-demand, satellite radio and mobile phones. Moreover, all the marketers have committed to spend in these high-growth areas, and it's expected that pilot programs will emerge from the research in coming months.
Visa USA VP-Advertising Nancy Friedman says just as important as programs like Next is integrating those forward-looking insights into day-to-day thinking. "The nice thing is that they combine the expertise in what's coming down the pike with the regular planning group so it's not just an entity within itself," she says. "It's well-integrated."
JCPenney Chief Marketing Officer Mike Boylson says that OMD has been pushing the retailer to re-evaluate "all of our customer contact strategy and all of our media across all three channels"-stores, Internet and catalog. "As a company we've got to rationalize that and we're engaging OMD's research arm this year to look at our total media plan beyond electronic for the most effective way to communicate our story."
"We're not an easy company to work for, but they really respond," says Mr. Boylson. "They've been ahead of the curve. They were pushing us before we were even ready to look at the total media plan. We've finally recognized the need, and we're ready to take that step."
In 2004, OMD began in earnest the process of beefing up its bench of strategic thinkers, hiring Mike Hess as global research director.
Last year, Mr. Hess brought in Sandy Eubank to focus on research in the U.S. Finally, in a high-profile snatch, Mr. Thompson lured Mark Stewart from Universal McCann as managing director of OMD East and to help chart the agency's future.
Mr. Stewart is focused on improving tools, like the proprietary process Checkmate, and rolling new ones like a new market structure tool called Prospector, as well as accelerating channel planning. He describes his role as "helping to create OMD 2.0."
Asked about this characterization, Mr. Thompson says, "I think we're already moving onto OMD 3.0."
BECOMING OMD 3.0
Mr. Thompson and the rest of OMD's North American operating council spent two days earlier this month in a hotel in Connecticut to develop a five-year business plan that will help the agency structure itself for the explosion of digital media, including TV formats such as DVRs and VOD, as well as Internet blogs and podcasts.
The agency is enlisting a management consultancy, Omnicom's Stromberg Associates, to help implement the plan. But before they can get too far into the future, OMD will have to deal with some more immediate issues. In a bit of deja vu, 2006 has started with a shock of its own. Three major clients have, in quick succession, taken their business elsewhere.
First, ABC, for which OMD had done highly regarded work, moved its business to Wieden & Kennedy's New York office. Then, OMD lost Wm. Wrigley Jr. Co. in a consolidation review to WPP's MindShare. Finally, DirecTV returned its creative and media business to Interpublic Group of Cos.' Deutsch.
As you'd expect, Mr. Thompson claims to be more determined than frustrated. "I hate losing more than I love winning. I hate it with a passion. We'll move on. We'll find out what we did wrong and move on."
Top five wins
OMD says it gained $1.4 billion in total new business
1. Bank of America--$600 million
2. Lowe’s--$315 million
3. Schering-Plough’s Levitra--$110 million
4. eBay--$90 million
5. Hilton--$85 million-plus