Inside OMD’s Reorganization

NEW YORK A little more than two months ago, Intel awarded its $300 million media account to Omnicom’s OMD, which outdueled Publicis Groupe’s Starcom and the incumbent, Interpublic’s Universal McCann. At the time, Nancy Bhagat, the client’s vp of sales and marketing, said, “OMD gave us a stronger sense of possessing world-class media industry leadership and state-of-the-art business intelligence and analytics.”

During the pitch, Page Thompson, OMD’s North American CEO, and his team presented to Intel the shop’s new approach to doing business, the result of a complete overhaul of the agency’s operations. The new structure, being launched first in the U.S. and then expanded globally, is organized around client teams.

The reorganization, about halfway completed, is the culmination of several years of planning how to remake the agency for the future, Thompson said.

Several media shops have lately been working out issues of future positioning. In April, WPP’s MindShare also undertook a reorganization based on client teams. (MindShare and OMD are the biggest media agencies in the U.S., both with close to $11 billion in annual billings.) Aegis Group’s Carat and Pubicis’ Zenith Media reorganized last year.

OMD’s restructuring will be followed in September by a relocation of the shop’s New York headquarters to larger office space in Manhattan at the former AT&T Building, which also houses competitor MPG, a unit of Havas. Eventually, said Thompson, all Omnicom Media Group companies — including its entertainment and sports marketing unit and global media agency PHD — are expected to make the move downtown into the same building.

The reorganization has shifted some of the agency’s most senior executives into group account director roles from positions where they previously oversaw operating units.

Intel is a case in point. Bob Habeck, who had been running Prometheus, OMD’s Chicago-based “agency within an agency,” now oversees the Intel assignment. Prometheus will no longer have a single manager, and executives there now report to regional office heads.

Mark Stewart, who joined OMD in 2005 as East Coast operations head, now oversees the shop’s estimated $500 million Visa account, a responsibility he assumed in January when the agency won the assignment after a shootout with the incumbent, WPP’s Mediaedge:cia. And Monica Karo, who previously oversaw OMD’s Western region, is now a group account director focused on two major West Coast clients: Apple (with estimated annual ad spending of $365 million) and Nissan ($780 million).

“Clients want more dedicated people and more senior people on their business and that’s what we’re giving them,” said Thompson. “They don’t want a bunch of bodies running around that they don’t know.”

And there may be fewer bodies around the agency in the future, Thompson said. The reorganization is designed in part to trim a layer of mid-level account staffers who spend too much time doing clerical work (like resolving time-buy discrepancies) and not enough time focused on client strategy, said Thompson.

Two initiatives will help reduce the bulge. The first is a budget management unit that completes the bulk of the shop’s ad spending reconciliation tasks and gathers cost data for client campaigns. The second is an intense two-year “up or out” trainee program focused on key disciplines such as strategy, business intelligence, media buying and digital services. Client teams will have a dedicated specialist in each of those areas.

While OMD’s roughly 1,200 person staff may get “a little smaller,” no drastic reductions are planned, said Thompson. “Does that mean 20 percent? Absolutely not,” he said. The goal is to instill a new mind-set at the agency. “We are no longer just in the media or communications business,” he said. “We’re in the sales and marketing business.” Which is to say, the real task is to help clients sell their products and services.

Alan Cohen, who joined two months ago as CEO of U.S. operation, said he plans to utilize many staffers “a little differently” going forward.

“We want to take advantage of what people know here,” he said. “People use about 5 or 10 percent of what they know in their jobs. I want to capitalize on the other 90 to 95 percent” in order to inject fresh thinking about client strategies. “The people who work here know about music and pop culture and design and new products. They travel and see stuff that no one else sees,” he said.

Cohen, who is based in Los Angeles but plans to move to the shop’s New York HQ within six months, joined OMD from IPG’s Initiative, where he oversaw West Coast operations. He joined that agency in 2005 and developed a unit called Innovations, tasked with developing new techniques for both existing and emerging media.

On Cohen’s watch, the Innovations division developed a program called “pod puncher” that put five-second spots at the close of commercial pods to combat ad skipping via DVRs. He was also the first to use a micro-memory stick in an ad campaign (to display new season programs for CBS), having encountered the technology while traveling in Japan before the sticks arrived in the U.S.

Cohen hopes to duplicate those successes at OMD with a new unit called Ignition Factory, which is based in Los Angeles but will maintain staff at all other OMD offices, including New York, Chicago and San Francisco.

Last month, OMD hired Cohen protege Jonathan Haber from Initiative to oversee Ignition Factory. “I’ve had a group like this going all the way back to my days at NBC and ABC,” he said, referring to stints earlier in his career when he was a network promotions and marketing executive. “It’s basically focused on new things to break through the clutter.”

And in today’s fragmented media environment, he said, breakthrough ideas “are more important than ever.”