Omnicom outlook

By AdNews | 6 October 2006
Omnicom deputy chairman Michael Birkin talks with Paul McIntyre about the diversification of advertising networks, integration and the rebundling of media and creative agencies. PM: Your three global advertising networks (BBDO, TBWA and DDB) are busy diversifying into other communications disciplines. Integration looks like it’s winning over the specialists. MB: There’s a generation shift going on in the managers of our main divisions and that is leading to a different thrust insofar as they’re broadening their business. I think they have the talent to broaden their businesses into communications companies and that’s what they’re doing. Integration has been a big talking point for some time and good integration is fundamentally a very good thing. But equally, as service providers, we need to be flexible. There’s no point creating an industrial revolution type of integrated structure just because everyone’s saying clients need integration and then force-feeding it to every client. All their structures are different. You just have to be the best in class, whatever it is you do. It’s impossible in all cases to be the best in class at everything. Our business is made up of human beings and you can strategise as much as you like, but at the end of the day it’s those who have good chemistry and want to work together – even if it doesn’t necessarily look like the structure is set up correctly – that will prevail. PM: The ad agency diversification must be creating some tension with Omnicom’s Diversified Advertising Services (DAS) though. MB: It really doesn’t present a tension with DAS. It’s not territorial at all in that sense. DAS is a huge group within Omnicom. I’m still very active for DAS in Asia and DAS’s growth continues. It’s just in the same way we’ve managed to run competing brands in the past, we will continue to run competing brands. PM: How far will TBWA, BBDO and DDB go in the breadth and depth of services they offer? MB: The only thing that matters in our business is the clients and our people. If we attract the best people and do the best work we should get a fair reward for that process. Now, within the context of our clients needs, we have to try to focus our management minds on what it is they have the ability to manage to a position of best in class. If you are BBDO and you are the most lauded ad agency on Madison Avenue for many years, it’s not good enough that you have a decent DM agency. You’ve got to have an equivalent standard DM company. So we encourage our agencies to continue to work with DAS companies and if we come to a conclusion that a client is better served doing that, it will continue. However, as the agencies are developing more into communications companies, that gives them a stronger chance for developing best in class because by definition they are honouring all the services in their group and attracting the talent to do the best work. PM: But as your advertising networks are encouraged to diversify, I assume you’re not telling DAS companies to do likewise. MB: I’ve been at Omnicom for nearly 15 years. I can probably count on one hand when we’ve actually told a company “you are going to do this” or “you are not going to do that”. We work on the basis that we have, we believe, the most entrepreneurial environment of all the major groups. It’s not to be critical of our competitors – many are very good. But we don’t choose to exercise control to the point of saying “this is the service you should be in and this is the service you should not be in”. Our whole ethos is that the heroes in our business are the people doing the work for our clients. PM: So what is a typical Omnicom ad agency going to look like in 10 years? Will they all be playing in the same space? MB: The watchword of our business is creativity. Year in, year out, we are the most highly awarded group. TBWA, DDB and BBDO are perennially ranked one, two and three in the Gunn Report. You will certainly find agencies will be competing across a broader platform in years to come and that just means the competition ground has shifted. Agencies will still have very different flavours. It used to be just “the work, the work”, which was somewhat above-the-line ad-focused. That’s been part of the generation shift going on very successfully right now globally. It’s holding on to the parts of the business that are really absolutely as relevant as they ever were and, most importantly, hanging on to the culture which gives the business so much strength. PM: What about the rebundling of media and creative services? Some of your people want it but Omnicom won’t allow it even if it’s a good thing to do strategically. MB: It comes down to human beings again. If you are going to do the right job and best job for your clients, you’ve got to make sure you get the best people. To get the best you’ve got to create an environment in which they feel like they’re making a difference and they’re honoured. There was certainly a big case put that the media departments of ad agencies were not being honoured in a way they should have been. PM: But media unbundling occurred at a time when buying power was essentially the primary strategic lever. Media strategy is well beyond pure clout today. MB: True, but our way of thinking at Omnicom is that the best strategies are created by people who are doing the work, not by people looking at it from a distance. PM: But it’s your creative agency people on the ground who are among those calling for media and creative to reunite. MB: It hasn’t come to me insofar as somebody saying we feel we’ve now got to change the strategy we have been on. It hasn’t reached me insofar as someone saying we’re wrong, we’ve got to change it. Does that mean in a very fluid environment that everyone is happy? Probably not. But I don’t see the evidence for doing that and if I did, I’d still want to test it, test again and again. Is there better media service being provided now for clients as a result of the strategic decisions that were taken? Are clients better served by the structure we have now compared to the structure we had 10 years ago? If the answer is yes, then it will prevail. If not, then it won’t prevail. Then it comes down to the quality of people in the organisation and their focus on clients. Birkin's journey Birkin made a name for himself building Omnicom’s Diversified Advertising Services (DAS) division after Omnicom acquired Interbrand in the early ’90s when he was chief executive. He read law before switching to Price Waterhouse as a trainee accountant and switching again to become PA to the chairman of Hambro Life, now Allied Dunbar. At Hambro, he came across Interbrand. Many believe his ascension to John Wren’s position as worldwide president & chief executive of Omnicom rests on his tenure in the Asia Pacific.

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