Q&A OMD's Daryl Simm

Interviewed by Jack Feuer Photography by Chris CasaburiThirty years from now, when the captains of the media business are retired and telling tall tales to wide-eyed junior buyers, Daryl Simm won't have to exaggerate. The soft-spoken CEO of Omnicom Media and president of OMD Worldwide is one of the pioneering architects of unbundling, a pivotal player in the rise of the media-dominant philosophy that rules much of global marketing today.English-born, Canadian-bred, the 39-year-old Simm was a media wunderkind almost from the day he graduated from Sheridan College in Oakville, Ontario. Joining Procter & Gamble in 1984, he was named head of national TV for P&G in 1988 and was introduced to the media-specialist concept firsthand as the company's original European media director in 1992. His charge there was to consolidate media at a single agency in every P&G country in Europe. Two years later, Simm returned to the U.S., where, at age 33, he took the reins of all of P&G's media operations worldwide. Named vice president of media and programming at the packaged-goods giant in 1997, Simm spearheaded the company's worldwide media consolidation and the general unbundling of P&G media from its brand shops.In 1998, Omnicom lured Simm away to run its media efforts around the globe. For the next two years, he worked to build an Omnicom media network, but struggled in the U.S., where the powerful leaders of Omnicom agencies BBDO and DDB negotiated hard to keep strategic media planning at their shops—a position on which they ultimately prevailed. In the beginning of 2000, OMD USA was finally born as a media buying sister to BBDO, DDB and TBWA\Chiat\Day that includes entertainment and sports marketing divisions and a groundbreaking national radio group. BBDO's Steve Grubbs came on board as OMD CEO, and DDB's Dan Rank moved over as managing partner. Simultaneously, Omnicom launched a second international network, PhD, also under Simm, which in the U.S. includes the giant holding company's more entrepreneurial media operations Creative Media, headquartered in New York, and St. Louis-based Advanswers.Simm sat down with Adweek media editor Jack Feuer to survey the state of OMD in particular and the media business in general, and to explore how media agencies and the media themselves are evolving as the new century unfolds.ADWEEK: Is media something you always intended to do?SIMM: I've always been fascinated by advertising of all kinds. When I first interviewed at P&G, there were three openings in the media department. One was in national television, and that turned out to be a great opportunity for me. So I started out buying TV.ADWEEK: Did you see the future coming?SIMM: Even in those days, fragmentation was accelerating. Cable and syndication were making an impact. There were more and more print titles showing up. It was becoming increasingly evident you needed far more resources than you had in the past to plan and negotiate effectively. In my mind, we needed a complete rethink of what these new capabilities were and where they were going to come from. ADWEEK: That must have produced some synergistic insights when you went to Europe.SIMM: Yes, media specialization was breaking out everywhere in Europe. I also observed the concepts of optimized schedules and respondent-level measurement data for the first time. I could see the power of that to improve schedules and the productivity of media budgets. ADWEEK: And then you came back to the U.S. and consolidated P&G media, another pioneering idea.SIMM: The experience in Europe had a huge impact on my thinking when I came back to the U.S. Not only had I discovered the power of the media specialist and the new tools, but also the power of competition—what could be accomplished when the media business was pitched as an entirely separate piece of business. ADWEEK: And then [Omnicom leaders] John Wren and Bruce Crawford gave you the opportunity to practice on the agency side what you preached as a client.SIMM: It was the next logical step in building a media career: to move to a business where media is the business.ADWEEK: What are the differences between being a client and being on the agency side?SIMM: The biggest eye opener when you come to this side of the business is the intellectual horsepower and the dedication and loyalty these people have to their clients. It's way beyond what your expectations are as a client; you're inclined to be a bit more protective than necessary in terms of the strategy. But when I look at the capabilities, I realize I might have missed some opportunities there. ADWEEK: OMD USA is nearing the completion of its first official year. How is it doing?SIMM: We're very happy with it. We officially started at the beginning of April, and we had to move quickly to put together buying for the upfront. I got unsolicited calls from big vendors saying, "Wow, you guys have really done it and leveraged your position." ADWEEK: Where strategic media planning is housed is a major issue for your industry and a big part of the discussions that resulted in the formation of OMD USA. What is your take?SIMM: Our clients have different objectives, needs and ways of thinking about their business. In a world where we have more servicing options, we need to tailor those options in a way that delivers on clients' objectives. There are full-service media agency clients that want planning aligned [with their brand agencies] at the same time they want the benefits of the tools, services and buying power of media specialists. Other clients want the full, unbundled nature of a media planning and buying company, and align that with a creative agency. Then there are clients who prefer to have media completely unbundled and handled by independent organizations. The right approach is to have all of these solutions available, so we can tailor any solution—I think what you see in our organization today are client advocates.ADWEEK: The small but elite community of global media networks is now all but complete. How has competition changed as a result?SIMM: You have to be a global agency. There isn't a choice in the competitive environment that we face.First, there's a premium on bringing forward the best tools and best research approaches from all over the world and making them available market by market, so ironically, you need a global network to compete at the highest level locally. We have the Omnicom Media Research Group, which includes senior people in London, New York and Singapore who operate as a team. Secondly, an increasing number of clients don't have the time, resources or energy to sort through relationships country by country. They want one service provider that can deploy their strategy through a regional hub or a global hub. If you're not a global network, you're going to be on the losing side with those clients.ADWEEK: In the U.S., many smaller competitors use the "big fish in a small pond" appeal, declaring they can service smaller clients better than the global media shops because they can devote more attention to them.SIMM: A client is going to make its decision on the basis of the resources and quality of service on its business. I don't see a natural correlation between small and large agency in terms of delivering that.ADWEEK: How do the global media agencies function on a market-by-market basis? SIMM: In Asia and Europe, global agencies provide planning, buying and other services to agency partners and media-only clients. Those markets developed that way because in a short period of time they went from heavily regulated and government-owned media with few commercial opportunities to an environment in which commercial television was breaking out all over. Media agencies really jumped on that as a business opportunity. The media scene in North America and the U.S. in particular evolved over time [with] heavily commercial media. So there were professional media people inside the agencies that responded to that environment. That's great for U.S. clients because it means there are strong media pros inside companies like ours and our competitors, but also strong media people inside our advertising agencies. If you look at our partner ad agencies—BBDO, DDB and TBWA\Chiat\Day—they are developing their [local OMD] offices for clients that care to have their service that way. The research, the benefits of size and scale, the entertainment marketing and sports marketing groups, all of those resources can be delivered through those structures. I'm sure a number of our competitors are thinking the same way about those markets. That's the reason we're looking to fill a newly created OMD worldwide CEO position right now. It's time to put more effort and energy into building the brand in international new-business leadership to get some full-time resources through a dedicated, worldwide CEO.ADWEEK: What are the implications of the big media-only reviews we are seeing so frequently? SIMM: They are all indications of how important media decision making has become within the total marketing process. All of these clients believe they need a strong and dedicated partner that can help them understand where their consumers are and how to reach those consumers. We're going to see more of these reviews. Whenever large clients take that initiative, it raises the interest of others.ADWEEK: One of the ways in which you deliver your tailored solutions is through a second international media network, PhD. Do you expect other media agencies to follow suit and create similarly distinct second channels?SIMM: PhD provides clients with a different kind of service sensibility. The companies in PhD are independent, entrepreneurial media entities that started their businesses without any clients and built relationships on a media communications planning basis. While they have strong buying credentials, their focus is on strategy, ideation and planning development. That allows us to offer a contrast with OMD's size and scale and ad agency service heritage. Most of the large holding companies already have more than one media brand. There's Media Edge and MindShare at WPP, MediaVest and Starcom at BCom3. [But] I'm not sure those brands are distinct from one another. I don't think we're going to see the PhD kind of brand development by our competitors.ADWEEK: What do you sense are clients' attitudes toward the media function today, and does it vary by client size?SIMM: Clients are frustrated at how complex the environment has become and how difficult it is to come up with the right solution. As far as I can tell, they all believe that new kinds of resources have to come forward, but the way they think of delivering against that need can be different. Generally, the large client sees the need for one provider that can leverage their scale effectively in a fragmented market that is, ironically, held by fewer media sellers. A large client can capture efficiencies in internal management structure as well as the obvious media efficiencies, where those opportunities are in some cases less obvious to the smaller clients. Small and midsize advertisers, because they don't deal with as much brand fragmentation or complexity, are often better able to deal with a more customized set of relationships.ADWEEK: You mentioned consolidation among media sellers. Is that trend proceeding as you anticipated?SIMM: We were predicting a few years ago that in four or five years there would be five or six global media players and then there would be everybody else. That looks pretty much on schedule to me.ADWEEK: Let's talk about the impact of technology on the media agency business. First, what do you think are the challenges posed by convergence?SIMM: I'd prefer to deal with the issues we can do something about today. Those issues are a lot more important in the foreseeable future than convergence, because I can't get my head around what that means. I think the most interesting challenge in that regard is the personal video recorder. I expect they will be sold by the thousands this holiday season, so we're weeks away from large numbers of viewers significantly changing their viewing and exposure habits. The challenge of that is: How are we going to effectively get through to those consumers with our conventional TV advertising approach? On the other hand, these devices offer a huge opportunity because viewers are going to be doing a lot less surfing and will presumably be more intently enjoying their viewing experience. I don't know what the solution is yet, but we have entered into agreements with PVR companies, where we participate in their advisory councils and encourage our clients to take advantage of the proprietary low rates we've negotiated for testing. ADWEEK: What about interactive media? SIMM: If you have an e-business strategy, you have to be there to drive consumers toward your [site]. If you don't have an e-business strategy, then don't spend your time dabbling in interactive or actively advertising that way. Simply consider it as another option for reaching consumers. Dabbling takes effort away from our real priority, which is reaching our clients' consumers in the most effective and persuasive way.ADWEEK: Let's end on the bottom line. What are your views on performance-based compensation for agencies?SIMM: I view every form of compensation as performance-based. On the most fundamental level, if you perform well, you retain your assignments and continue to be compensated. If you don't, you don't and compensation is cut off. When it comes to incremental incentives or bonuses, the key is to make sure they align the client and the agency together in pursuit of their common goals. The trap to avoid—and it is a significant trap—is that it's easy to slip into an incentive plan that ultimately gets the client and agency out of alignment. That has to be avoided at all costs.

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Q&A OMD's Daryl Simm

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