Omnicom Realigns Media Group To Bolster PHD

In its move to expand PHD into a global media agency network—with an added presence in Europe, the Middle East, Africa and Asia—Omnicom is realigning its Omnicom Media Group and adding new layers of management.

The realignment signals Omnicom’s efforts to grow its media business (it’s currently fourth in billings behind WPP, Publicis and Interpublic, according to RECMA) by building a second worldwide brand from within, as opposed to buying an existing brand.

As part of the realignment, two newly appointed OMG regional executives will gain oversight for both OMD and PHD in their territories, with the regional heads reporting to OMG CEO Daryl Simm. Mark Amabile, previously OMD Worldwide chief financial officer, becomes OMG CFO, also reporting to Simm.

Still, Omnicom executives stressed that PHD and OMD would continue to operate independently of one another, providing proprietary research, media and communications channel planning and buying capabilities, among other services. The two will have separate offices and dedicated client service teams.

In a few markets, PHD will start virtually from scratch. But in most markets, it will rebrand local agencies it already owns, such as MediaWise in Hong Kong, Singapore and Scandinavia.

As part of the changes, OMD Worldwide CEO Joe Uva adds the title of president, OMG, and continues reporting to OMG CEO Simm. An OMG global board also has been created, including Simm, Uva and Amabile, as well as David Pattison, worldwide CEO, PHD, Colin Gottlieb, newly appointed CEO, OMG Europe, and Mike Cooper, newly appointed CEO, OMG Asia Pacific.

According to Simm, the expansion of the Omnicom Media Group throughout Asia and Europe “is focused on providing OMD and PHD clients with the full benefit of our Omnicom scale. And that comes in areas like buying, analytics and emerging media.”

Simm said Omnicom would commit additional millions (he declined to provide a more exact figure) to those scalable resources as PHD expands beyond the three markets where it now operates (U.S., U.K. and Canada). Currently, OMD is Omnicom’s one truly global media agency network, with billings that RECMA estimates totaled $20 billion in 2004. (By contrast, PHD revenues for the same period totaled just $5.2 billion, per RECMA.) But like its rivals, such as WPP, Omnicom believes that multiple worldwide media agency networks are necessary to ensure future competition.

“Today, more clients are asking for international network service, and the expansion of PHD will provide us with the additional capacity to handle those requests,” said Simm.

The so-called media-holding-company-within-a-holding-company model is one that Omnicom’s competitors have also embraced or are considering. WPP’s media agency networks are housed under GroupM, and Interpublic Group recently formed IPG Media to manage its media agencies. And at Publicis, Starcom and MediaVest reside under the Starcom MediaVest tent; and its ZenithOptimedia agency may be folded under SMG.

Both WPP and Publicis are said to be chasing Aegis, the largest independent media agency. It’s unclear how that entity would fit into either WPP’s or Publicis’ media organizations.

WPP was the first to establish an umbrella company for its media holdings with the formation of GroupM, headed by Irwin Gotlieb, who oversees the operations of MindShare, Mediaedge:cia, MediaCom and Maxus.

Collectively, the agencies managed by GroupM generated worldwide billings of $48 billion in 2004, according to RECMA, giving WPP the largest share of global billings. Publicis is second, with estimated billings of almost $37 billion across its four agency networks, and Interpublic follows with almost $28 billion in media billings.