Omnicom Group is set to pay $835 million for Ascential’s Flywheel.
Omnicom Group inked the largest deal in its history this week to acquire Flywheel Digital, the digital commerce business of Ascential, for $835 million.
John Wren, Omnicom’s chairman and CEO, said Flywheel will give the holding company an advantage in e-commerce, one of the biggest drivers of the agency business today, by combining its existing Omni data platform with what he called the “power of the [Flywheel] platform to handle millions and millions of transactions in real-time.”
The acquisition stands to double the amount of data that Omnicom has available to deliver insights, said Paolo Yuvienco, its chief technology officer, noting that Flywheel’s focus is primarily centered around transactions and products, whereas Omni’s data is primarily centered around audiences and behaviors.
Flywheel currently handles work for over half of the world’s largest 100 public consumer packaged goods brands, according to an Omnicom presentation deck announcing the deal obtained by Ad Age. Some of the clients shared by both entities include L’Oréal, Johnson & Johnson, Mars, Philips and Clorox.
Traditionally, Omnicom has taken a build-rather-than-buy approach to data-driven marketing. It made a bet to build Omni over 10 years ago, while rivals such as Interpublic Group of Cos. and Publicis Groupe made big data acquisitions, buying Acxiom and Epsilon, respectively.
“We looked at those companies at the same time they did and chose not to buy them because we didn’t need it,” Wren said, calling those deals “superficial.”
But Flywheel was different. Given its robust and complementary capabilities to Omni, the holding company began considering an acquisition during the Cannes Lions International Festival of Creativity this summer. Wren recalls Omnicom Digital CEO Jonathan Nelson telling him: “You could have an open checkbook, but the world would have to stand still for five years in order to catch up to what they’ve been able to accomplish.”
The deal is expected to close during the first quarter of 2024. Once completed, Flywheel will operate as a practice area within Omnicom and will be led by Duncan Painter, Ascential’s current CEO. Separately, Ascential, which is the organizer of the Cannes Lions Festival, has also agreed to sell its product design business WGSN to private equity group Apax Partners for up to £700 million ($848 million).
Multiple people who spoke with Ad Age about the deal said it could potentially be a challenge for Omnicom to integrate Flywheel into its ecosystem.
“This is a bold move by Omnicom to drive a transformation for themselves in this space,” Greg Paull, principal of consultancy R3 said. “Their biggest challenge will be integration—Omnicom has never had the acquisitive approach of Publicis or WPP—it will mean a lot of internal stakeholder management needed.”
But it’s clear that strong capabilities in e-commerce and retail media are now table stakes for the industry. At this year’s ANA Masters of Marketing conference, retail media had its largest presence ever at the event. Global e-commerce sales are projected to top $7 trillion in 2025, according to a recent report by Insider Intelligence.
That has spurred the race for holding companies to increasing their investments in the e-commerce space. In 2022 WPP acquired Netherlands commerce consultancy Newcraft and e-commerce agency Corebiz. The same year, WPP launched a DTC e-commerce solution called Everymile. In early October, WPP announced a partnership with global commerce company Shopify.
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In June, Publicis launched a retail media platform developed by its commerce analytics unit Profitero, which the holding company acquired in May 2022. Havas CEO Yannick Bolloré recently told Ad Age he predicted that retail media will soon become the second-most invested space in advertising. Last month, Havas entered into a partnership with retail media network Mirakl.
Last year, Omnicom launched an e-commerce consulting practice, Transact, which helped the holding company win the $1 billion L’Oréal media account, and it will continue to “operate [that] business as usual,” according to a spokeswoman. Omnicom has also made its fair share of acquisitions in the space. In July, Omnicom acquired Brazilian commerce and retail media agencies Outpromo and Global Shopper.
Flywheel’s name recognition in the space “especially with CPG brands” is what makes the move attractive for advertisers, said Tom Denford, CEO of media and advertising consultancy ID Comms.
“Agencies always have to be careful about adding more technology brands to their roster as it becomes logo-soup and clients can’t navigate the complexity,” Denford said. “Flywheel has high salience already with Omnicom clients, plus relationships with clients of other agencies which will prove to be the real premium of this acquisition.”
Omnicom “needs credibility, leadership, and the know-how to compete and to satisfy the demands and the complexity within the e-commerce and the retail media space,” said Rob Rivenburgh, CEO of e-commerce company The Mars Agency.
Jared Belsky, co-founder and CEO of digital agency Acadia, said he hasn’t been surprised by the acquisitions made by holding companies, including this one.
“Holding companies have been a little behind on retail media and marketplace adoption,” Belsky said, even though “that’s how every chapter in digital has gone for the last 30 years. The old companies were slow [into] search. They bought their way into search. They were slow [into] social, and they acquired their way into social, and now they’re slow [into] retail, and they’ve acquired their way into retail.”
“What I think has happened is RFPs have evolved,” he said. “Two years ago, clients were happy to have a media agency and then an Amazon retail media agency. That’s becoming less exciting. I’m seeing more RFPs each week that want one agency to stop the silos and steward money between traditional, performance and retail media.”
Added Belsky: “Omnicom had a choice to either be part of this and lead or be left out.”
Flywheel has more than 2,000 employees and services more than 4,500 brands, according to Omnicom. The capabilities from these brands now sit in one platform within Flywheel called the Flywheel Commerce Cloud. Omnicom tested the platform to see if it could handle an additional “thousand new clients,” for example, Yuvienco said.
“When you look at the overall commerce ecosystem, there are many solutions, but there’s none that is as comprehensive as what Flywheel brings to the table,” Yuvienco said, calling out its strength in retail management and operations, retail media and measurement, and benchmarking.
“The reason why it’s so comprehensive is that, over the last decade or so, they’ve been doing multiple acquisitions of companies that have point solutions or that cover certain facets or areas of those three propositions. What they’ve done over the years is basically consolidate all of those platforms into a single platform to really build out the most comprehensive and most scalable capability that covers all three areas that are important to our clients.”
He said that the combination of the Flywheel and Omni will result in a cross-pollination with “more audience data and more behavioral data in driving the conversion in the marketplaces, but then also using that conversion data within the marketplaces to drive better intelligence around audience targeting.”
Previously Omnicom had to make up for any data shortcomings by sourcing through third parties. Also important was that all of Flywheel’s data was “non-PII,” according to Wren, meaning it doesn’t include any personally identifiable information.
The goal is for Omnicom to integrate Flywheel’s capabilities across the holding company, including its media and creative businesses. However, Wren was adamant that he would continue to support its legacy agency brands despite continued investments in tech.
“The one thing that’s true about Omnicom that is not as true anywhere else, is my belief in creative and my steadfast support of our creative assets. All this technology basically brings information which informs our creative, and it allows them to put more science behind their ability to generate great insights and therefore great client ideas,” Wren said.
