Does the world (and Omnicom) need yet another media agency network?

Omnicom maybe does, at the moment it has two – OMD and PHD – under its OMG holding operation (OMD/OMG is hardly a branding triumph either).

Actually it has two and a half because OMG is a big shareholder in Eric Newnham’s new OOH agency Talon and the plan here is believed to a buyout of Newnham and co in a few years if he succeeds in winning enough non-OMD/OMG business.

Omnicom is reported to be looking for a CEO for a third main media network, supposedly to allow it to take on conflicting business. This was the reason given for Interpublic’s formation of a third media network, BPN, last year.

But clients are pretty forgiving of conflicts within media shops, certainly in comparison to creative agencies. At least as good a reason for starting a third (or fourth or seventh if you bring in WPP) is local business.

The bigger media (and creative agencies) tend to suffer hardening of the arteries due to their dependence on a few huge global advertisers. After a while they become inert monsters, devoting their life to ministering to Ford or Glaxo or Unilever.

And local business can be big. L’Oreal is currently pitching its UK media business (having resisted countless overtures to concentrate its global spend in one agency) and that’s worth up to £134m. Hardly peanuts then, and probably more profitable for the lucky UK winner than handling a similar-sized chunk of a global media account.

So there are lots of reasons why having a number of media agencies works. Whether or not you actually need as many as WPP has is a moot point. It has MediaCom, MEC, Mindshare and newbie Maxus (supposedly a conflict shop). Interestingly, Maxus is probably the liveliest of the bunch. Sitting above these is media ‘holding’ company GroupM which, in the UK at least, handles the main annual price negotiations on behalf of all the WPP media agencies with the likes of ITV and Channel 4.

Then it has OOH giant Kinetic (former home of Talon’s Newnham) and sitting above that something called Tenth Avenue – making seven in all. This does seem a touch excessive but the bizarre thing is that it seems to work (or most of it does).

Depending on how you slice the WPP revenue cake (the company likes to highlight the amount of revenue that comes from ‘digital’) media makes about half WPP’s £1bn or so profit.

So the answer to the question posed in the headline is probably ‘yes,’ from Omnicom’s point of view anyway. You have to feel slightly sorry for clients though (yes you do, really) who probably only have vaguest idea about who these media agencies are, what they do and how they differ (if, indeed, they do).

No wonder the media auditing business is enjoying a boom all of its own.

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About Stephen Foster

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Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.