Last week, the rich got richer among the global media networks. After an eight-month, 50-market search, WPP Group's GroupM and Publicis Groupe's ZenithOptimedia prevailed over Interpublic Group's Universal McCann in Nestlé's $1.5 billion global media buying and planning review.
For GroupM, the win accelerates a two-year trend which, once it absorbs MediaCom as part of WPP's acquisition of Grey Global Group, will vault it into the top position among global media networks, with about $49 billion in worldwide billings—some $14 billion ahead of second-place Publicis. Falling further behind after the Nestlé decision is IPG, the least centralized of the Big Four media operations and the only one to see its global billings total shrink since 2002.
Universal McCann commanded the lion's share of the Nestlé business, including Latin America and the $560 million U.S. account. In other reviews, GroupM's Mediaedge:cia added more than $600 million in new North American business in the past two weeks, winning Paramount Pictures and Toys R Us from Publicis' MediaVest and Starcom, respectively.
Of course, the rankings will change again, and could soon. If IPG loses its estimated $1.3 billion Unilever business in Europe—which one source called a "heritage" account for the IPG network—it would drop closer to fourth-place Omnicom Media Group. (A decision in that review, in which IPG's Initiative is competing against GroupM's MindShare and Aegis Group's Carat, is expected as early as this week.)
It's a far cry from 2002. Figures from Paris consultancy RECMA show Publicis in first place then with more than $34 billion in global billings, following its acquisition of Bcom3, which married Starcom MediaVest Group and ZenithOptimedia Group. (Publicis last month formed a management board, Publicis Groupe Media, headed by Publicis COO Roger Haupt.) Next was IPG at just under $32 billion, which was just above WPP's offering of MindShare and Mediaedge:cia. Omnicom Media Group had $22.5 billion, although its OMD unit, with $18 billion in global business, was the largest individual media brand (and was again in 2003).
Sources said the new-business success of Publicis and WPP owes much to those companies' centralized approach, in which brands are equals and strategic and new-business decisions are made by overseeing entities—something GroupM CEO Irwin Gotlieb has called a "total parent" approach.
"Recent successes have started to indicate the potential in our media investment management and research strategy," said WPP CEO Martin Sorrell.
"On most pitches these days, there are two big competitors," Publicis CEO Maurice Lévy added last week. "That's not by design but by reality, and it's probably linked to the [media network] concepts and structures Publicis and WPP use. Then you have Omnicom, which is still winning business and not losing much."
Under CEO Daryl Simm, OMG's individual units operate more autonomously. OMD consolidated McDonald's $1 billion-plus media business on its own last year, for example, and PHD this year was awarded the $260 million Mitsubishi business on the strength of its ties to Omnicom's largest global client, DaimlerChrysler. Simm declined to comment on the Omnicom media offering.
While OMG ranked fourth the past three years, its PHD brand is only 2 years old, and the gap between it and IPG has been closing steadily.
IPG was the first holding company to develop a multibrand approach when it purchased Western International Media in 1994 and merged it with Initiative in 1998. (Its second brand, Universal McCann, is part of McCann WorldGroup.) IPG CEO David Bell said the holding company's response to its global challengers would involve its global negotiating unit, Magna, but not a move toward a more formal umbrella media arm.
"Magna's next iteration will take it to a place beyond what a number of our competitors have today," Bell said. "We're making headway in incorporating the power of specialty practices such as sports and entertainment marketing into the media offering. We're also bringing together our best minds in the area of research and analytics. ... The next phase for Magna will reflect what our media companies believe and what they are passionate about, not just some kind of top-down edict."