GroupM rivals "years behind"

By Paul McIntyre | 16 March 2011

GroupM chairman John Steedman has sledged media agency rivals as being “years behind” in their moves to consolidate their disparate media brands and buying clout under single holding company entities.

Steedman’s blast, which follows the appointment last week of Leigh Terry to chief executive of OMG Australia and New Zealand, triggered a fiery response from rivals, claiming GroupM was obsessed by the idea that size equated to quality.

WPP’s move to create GroupM globally in 2006 and the launch of the entity in Australia soon after was widely criticised by rivals at the time as cumbersome and evidence of a further push by WPP to “commoditise” the industry, by using a big stick to push prices down rather than lift the industry’s strategic standing. Steedman hit back today (March 16), telling AdNews the same companies that had ridiculed GroupM’s consolidation move had all since copied it.

In the past two years all the major media buyers have moved to holding company structures: GroupM with MediaCom, Mindshare, MEC and Maxus; Vivaki with ZenithOptimedia and Starcom MediaVest; Mediabrands with UM and Initiative; OMG with OMD and PHD and Aegis Media with Carat, Mitchell & Partners and Vizeum.

“They’re all followers,” Steedman said.

“They’re all singing from the same song sheet now but we’ve been doing it longer. We are better at it. We’ve got a big leap on them and as a network we’re more cohesive. We won’t lose that competitive edge. The end game is we will continue to diversify the business.”

Rivals, however, were quick to counter.

“They may have been the first holding company to form but it doesn’t mean they have the best working model,” said Mediabrands executive chairman Henry Tajer.

“And it sure as hell doesn’t mean they’ve got the best people. Going into a consolidation model four years ago as GroupM did was all about media buying. Today’s market is not about how many dollars you have in the market. In the last four years the catalyst for real leverage and real clout is how flexible you can be. To be honest, in coming to market after other players has let us see how they have struggled and we’ve learned those lessons.”

OMG’s new chief, Leigh Terry, echoed Tajer’s statements, and inferred GroupM was more dictatorial than others in the market with how its agency brands should operate.

“We’re not looking to put in place any such holding company dictate model,” he said. “OMG agencies have had phenomenal success without it. Empowering the brands is about support, not enforcement. Biggest doesn’t mean best, it certainly does not mean smartest.”

GroupM this week launched an advertising blitz in mainstream newspapers and online spruiking its credentials as the biggest media buyer in Australia. 

[Editor's note: This story has been altered post publication and quotes printed within the article have been removed. See comments below.] 

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