PHD: Added Communication Strategy Reason For Success

Omnicom Group’s No. 2 media agency brand has been a work in progress since the holding company merged its Advanswers and Creative Media shops with Chrysler buying unit Pentacom three years ago and christened the new entity PHD, after Omnicom’s thriving London-based media agency. But now, eight months into the reign of a new leader with a creative-agency pedigree and a focus on strategic thinking, PHD is coming into its own.

Initially created as a conflict shop to sibling OMD (one of the top three media agency brands in the world), the agency has won seven major new pieces of business this year, including four new accounts in May alone. And with just one client loss this year—the $45 million Porsche account—the agency has added new business totaling approximately $420 million in the first five months of the year. That’s just $80 million shy of the $500 million in new business that PHD won for all of 2004.

The most recent win was the consolidated media account for Charles Schwab, worth an estimated $100 million-plus, which was landed two weeks ago. This was just days after it won Jim Beam, with an estimated annual ad budget of $25 million. (See chart for other wins this year.)

Charles Schwab did not return calls, and Jim Beam declined to comment beyond a press release issued two weeks ago.

Daryl Simm, CEO of Omnicom Media Group, which oversees the holding company’s media shops, attributes PHD’s recent success to the addition of a more effective communications-strategy component to its offering. “PHD’s U.K. heritage is as a leader in strategic communications ideas. When PHD launched in the U.S., it started with superior buying capability and now the strategic component has really come together,” he said.

Consultants agreed that PHD, ranked 10th among media shops in 2004 with billings of $4.8 billion, has come a long way. “They were really on the periphery for quite awhile,” said John O’Connor, president of Boston-based Relevant Insight Group. “They’re not anymore.”

Still, it took some time. Steve Grubbs, CEO of PHD North America, is the first to admit that the agency initially struggled to meld the cultures of the three agencies that made up PHD and to shore up relations with jittery clients who had concerns about the merged entity.

“We turned over a lot of key personnel, including most of our office leadership in New York, St. Louis, Chicago and Detroit,” Grubbs said.

Among the clients on PHD’s roster, none is more critical than DaimlerChrysler, the agency’s largest account, which spent $1.8 billion in measured media last year, according to Nielsen Monitor-Plus. “We had work to do in Detroit,” said Grubbs. PHD hired seasoned car account executive Mike O’Malley last May to keep DaimlerChrysler happy. O’Malley had previously run the Detroit office of WPP Group’s J. Walter Thompson.

“Last year was when we really started to bring in the core management team,” said Grubbs. And several of the most senior members of the team came from creative agencies, including both O’Malley and Matt Seiler, who joined as president, PHD USA, last September. Seiler, 43, had been evp at the Omnicom Group, where he had oversight of the operating teams working on PepsiCo business. Before that, he was director of strategic planning at Omnicom’s BBDO New York.

“One of the things we are transitioning to is being more of a business partner rather than just a media partner for our clients,” Seiler said. “It’s no longer just about media planning and buying, but helping clients grow by using all forms of communications to build a brand.”

One of the first things that Seiler did when he arrived at PHD last year was hire account planner Peter Mears, who had held similar posts at both PHD’s U.K. and Canadian operations. His job is to help clients better understand consumers and their behavior. But the broader strategic approach that Seiler has brought to the PHD offering has been to create teams for each client that are anchored by what he calls a general “agent,” who oversees the account.

He likens the agent role to a sort of counterpoint to the chief marketing officer on the client side. “An issue with the holding companies,” he said, “is they have all these siloed experts, and there really isn’t anybody who is tasked with looking after the clients.” By design, the agent is supposed to consider, probe, ponder and weigh in with ideas covering every facet of the way the client communicates with the outside world, be it through advertising, public relations, event planning or promotions.

In addition to the general agents, PHD has a group of so-called “free agents,” like Mears, who are tapped to come up with specific solutions to individual client needs. Other free agents include Michael Gorman, who in April was appointed director of emerging technologies; branded entertainment expert Danny Arzewski; and David Coffey, head of PHDiQ, the online service.

Indeed, it’s the specialty areas that clients are increasingly focused on, said Grubbs. “The three areas where clients want us to take more of a leadership role are the emerging technologies, consumer insights and branded entertainment,” he said. “I’m looking to continually upgrade the service offering in those areas.”