Omnicom officially acquired the Interpublic Group (IPG) last week, almost exactly one year after the deal was first announced. On the day the new entity came into being, B&T was granted an exclusive audience with Omnicom Oceania CEO Nick Garrett to understand what has happened and what, more importantly, is coming next.
The US$9 billion (AU$13.59 billion) all-stock acquisition created by far and away the largest advertising holding company in the world. Digiday puts its revenue at US$26 billion and total billings at US$75 billion (AU$39.18 and AU$113 billion, respectively).
Official comms from the US described the new Omnicom as the world’s “leading marketing and sales company”. It’s clear, then that Omnicom doesn’t just do ads any more, there’s a far bigger play at hand here.
To that end, Oceania and Nick Garrett are ahead of the curve. The Omnicom Oceania entity was launched in July and it aligned all of its practice areas in Australia and New Zealand, bringing creative, media and PR agencies under a single operating structure, along with performance marketing, production and more. The acquisition of IPG added more firepower to the ranks and caused some consolidation, but more on that in a moment.
One might have considered that the culmination of the acquisition was the start of the formalising of this process. That’s not quite right. The acquisition’s completion is, in Garrett’s words, only “the end of the beginning”.
“We’ve done so much more work beyond the brand architecture. I just haven’t gone to the market and talked about it yet,” he said.
Brands, tools, people
There has been change, however. As B&T reported a couple of months ago, the DDB brand would be retired. Globally, it moved under the TBWA banner. In Australia, it was merged into the Clemenger Group. In New Zealand, it and the similarly retired FCB brand became part of McCann.
DDB Australia’s leadership, Mike Napolitano and Sheryl Marjoram, will run this new Clemenger business as co-CEOs. Former Clemenger CEO Lee Leggett has become Omnicom Oceania’s chief customer officer. Leggett herself was the CEO of CHEP Network when it merged with Clemenger BBDO and Traffik earlier this year.
The media agencies, however, have remained intact—client conflicts globally and locally were too complicated to iron out. B&T expects that with the normal in-and-out cycle of new business, it might become easier to work out which brands, if any, could be merged with each other. B&T understands there are no plans for the number or composition of the media agency brands to change.
Garrett said agency brands “matter deeply” but “culture eats strategy for breakfast” and clients are increasingly looking for a solution delivered by talent and tools, rather than just looking to work, in particular with DDB, FCB, TBWA, Clemenger, McCann or any other agency brand over another.
“Brands are really important. Those brands are rich with history and great brands will survive. Omnicom’s greatest strength is that it’s had the best creative and media brands over the last 20 years—not every single one—but if you’re looking statistically across the whole. What Omnicom has done lately but now aggressively is finding the cross-pollination and integration between the brands,” he said, noting that other holding companies had “almost removed” brands from their business models.
“Clients are looking for big solutions. Do I believe, having spoken to more than 200 clients over the past three months, that they care about brands? I think clients deeply care about the people that they’re working with. When those people are living a philosophy and delivering work relative to that unique and differentiated position for that brand, they care and then it really matters. That’s why they selected a TBWA, a PHD or anyone else.
“I think they are also really aware, though, that no single brand or network brand can offer all the marketing services they need. Even a creative and media partnership isn’t going to be able to go far enough and deep enough. They’re looking for end to end marketing partners, ecosystem designers, partners in marketing transformation, way beyond simply what a creative and media agency can do. Once you’re starting to design really complex, tech-enabled platforms, ecosystems and capability for big clients.
“When it comes to larger clients… then you are providing a holdco solution and you’re nearly always designing something that’s unique, bespoke and dedicated to them. +61 is an amazing example and there are others. There’s no one in the world with more experience, particularly so in Australia and New Zealand, of building bespoke agency and marketing services ecosystems that are proven to be successful and effective.”
There have been several high-profile departures following the acquisition—particularly among the former IPG staff. B&T understands that in this round of redundancies, just north of a dozen roles have been axed in this market, largely those where duplication exists.
The highest profile departures are IPG Mediabrands CEO Mark Coad, APAC boss Leigh Terry, chief investment officer Lucy Formosa Morgan and CFO John Clements. Harry Preston, the MD of Mediabrands Content Studio, has also left.
Acquisitions, especially those of this scale, will always result in the removal of some roles. The rejigging and retirement of agency brands is also not surprising—in anything, the simplification of agency structures and brands is a trend far from unique to this acquisition. Both are brilliant at filling trade press column inches, however, not least ours.
There have also been a raft of stories from mainly US titles about staff benefits, entitlements and more being cut as part of the acquisition. Any cuts in Australia and New Zealand will be smaller, B&T understands and we have heard of no changes to existing staff benefits, entitlements or similar.
To be clear, there is more to come and more to be announced emanating from the acquisition. There is more to be announced about the closer ties between all parts of the enlarged Omnicom ecosystem, too, as well as some new services throughout the ecosystem. But those are for another day.
Past Principles
Linking these capabilities together is about more than gaining a bigger slice of the client pie—B&T’s back of a fag packet calculations put Omnicom at nearly half of Australian and New Zealand agency land. Instead, it’s about moving the agency group upstream in the work it provides for clients. As mentioned earlier, it isn’t about just making ads and buying the spots and dots where the ads go.
In Garrett’s mind, the key to achieving this goal is empowering staff to deploy their expertise and knowledge across different end to end functions. A creative isn’t necessarily just an art director or a copywriter, they can become involved in media, strategy and more. And vice-versa. The old ways of working do not deliver the results clients are looking for.
But something akin to the older, full-service agency model way of working is perhaps more akin to what clients are looking for.
“If you dial back 20 years, Australia was one of the most integrated markets in the world. There was less media fragmentation and digital proliferation or digital transformation wasn’t a hot topic,” Garrett said.
“Australia was the first to use direct marketing, promotional communications and all these things to drive brand experiences because we didn’t have big Super Bowl-esque budgets and that meant Australian and New Zealand creatives had to be more innovative and they had to think of ideas before they thought of execution and channel. That’s not to say it was the same every time, everywhere and a universal statement but there was an innovative energy in Australia.
“I moved here in ‘99 and it no doubt predated me but look at the agency I joined, Whybin Lawrence TBWA, and the type of work we were doing was pioneering, it was game changing. Media was integrated to the heart of it. There was a real connection strategy and I think the ‘Disruption’ philosophy helped. But Australian and New Zealand creatives thought in ideas and you roll on into the mid-noughties and you see how so many Australian leaders, account people, strategists, creatives had exponentially more of the senior roles globally than they perhaps should have. They were exported all around the world… They were harder workers, prepared to break boundaries, and had less legacy issues. They could be strategic and project management and delivery experts. It was a time and place where I think Australia and New Zealand were ahead of the curve creatively.
“If you look at Cannes, and Cannes can’t always be judged as the best example of innovation, but a lot of the categories, the cyber categories, promotional categories, the direct categories, some of the best work was coming from Australia and New Zealand. I think we lost our way for a while. Digital transformation and scale didn’t help. But now if we can pull this off in Australia and New Zealand and create a really connected ecosystem between our connected capabilities, our media companies and our creative businesses—and whatever we build above and below—then I think we’ll build some extraordinary architecture and a wireframe that might be adoptable in other markets.
“There are principles of the past that we can look to… Creative agencies need to understand and get closer to channels and have the channel expertise that media agencies do. Look at [Clemenger] BBDO, the things they’re winning at the moment are media-led creative projects. Look at what OMG has built out creatively and they’re doing some extraordinary work.
“I think we’ve got to be very careful. Creativity isn’t execution. Creativity is solving client problems and accelerating opportunities with ideas. OMG has a huge content arm. They have a huge social arm and they’re producing hundreds of thousands, if not millions of creative assets for our clients every year. Do they have tier one creative capability? No, but their creative teams and creative delivery capability is huge. So by combining the best of these capabilities, we’ve got a huge operating opportunity to serve our clients better,” said Garrett.
“A Once In A Generational Moment”
Leading change initiatives is far from straightforward for anyone. Particularly so when leading significant change in an industry that, frankly, loves to gossip.
But Garrett says his experience at both the apex of agency land (as CEO of Colenso BBDO and Clemenger BBDO, as well as senior roles at TBWA\Chiat\Day and BMF) and in global consulting roles with Deloitte, gave him a unique chance to do something of extreme significance at Omnicom—though he was under no illusions that it would be easy.
“I’ve had a unique position where at least half of my job around the world was marketing advisory, transformation and operation design and knowing what clients are thinking, talking about being at the very sharp end of transformation and technology capability. Then being able to come in and do this job, you have a very macro perspective,” said Garrett.
“I think it’d be very hard if you were a creative or media person only, and I don’t mean only in a bad way, to step into a transformation role that sits above those services. I knew what I was getting into. I was very excited. I would have only come back for Omnicom… I feel very lucky that there are hundreds of exceptionally talented people that have lent into it and I’ve been blown away by their enthusiasm, passion and engagement.
“This was a once in a generational moment to do something extraordinary at scale and do a sincere transformation—not repackaging and moving things around. This is a transformation strategy, the new global architecture and the acquisition is the catalyst for the transformation. It is not the transformation itself,” he said.
How will we know if the transformation is successful? According to Garrett, it’ll be when clients are asking for “new types of things” such as more upstream services and if Omnicom’s agencies are able to sell ideas and thinking to clients that go beyond customer and marketing. Naturally, the bread-and-butter success metrics for agencies—expanding client bases, increased revenue—will all count but so will profitability and influence.
“Grow our profit base, be able to service our clients in the best way, and are the chief customer and marketing officers working with Omnicom being able to be more influential in their organisations and being able to point to strategy and growth? And if we are able to influence more of a client’s enterprise with our best creative and brand thinking and technology capabilities, then we’ll know we’re being successful.”
We’ll be waiting and watching.
