Omnicom’s media networks gain new mobility
“One of the reasons this is happening,” commentators said last year when news of the Publicis-Omnicom mega-merger first broke, “is because Publicis is strong in digital and Omnicom isn’t”.
Colin Gottlieb, chief executive of Omnicom Media Group EMEA
And they had a point – although it possessed a blue-chip portfolio of “traditional’ agencies, Omnicom lagged behind both Publicis and WPP when it came to digital and (especially) mobile: hooking up with Publicis, which had been aggressively pursuing a digital strategy for some time, made perfect sense.
So it was interesting to see the news earlier this week that Omnicom Media Group (Omnicom’s media business unit, which includes agency brands like OMD, Novus and PHD) had bought Mobile5, the UK mobile marketing agency that counts Samsung, Canon and Trinity Mirror among its clients.
Now this of course doesn’t mean that the “Publicom” merger isn’t going ahead – the acquisition of companies by both entities will carry on, albeit not on a huge scale as the merger beds in. They simply cannot discuss what they are looking at until the deal is finalised.
Nobody is saying how much money changed hands in this latest deal, but it must have been a tidy sum. Although less than three years old, Mobile5 already employs over 30 people in its London offices, and has a tasty client list, as we’ve already seen.
Mobile5 – set up by mobile veterans Oli Roxburgh, Steve Clarke and Guy Marks, all of whom appear to be staying – will continue to be run as a separate agency within Omnicom’s OMG network, based at the latter’s London offices.
Interestingly, Mobile5 will be familiar to OMG boss Colin Gottlieb and his team – the former has already worked with the latter on a number of accounts, notably PlayStation and Waitrose. So why did he buy? I think there are two reasons.
The first is that there’s a mutual synergy between acquirer and acquired. Mobile5 provides services such as mobile strategy and insight, mobile experience design, mobile content creation, mobile commerce and marketing solutions. Good, funky, creatively-led stuff – the kind of start-up DNA that big networks like OMG are always seeking to inject into themselves. But what Mobile5 doesn’t do is planning or buying: this is of course something that OMG does very well.
"They are doing the stuff that’s further upstream and that’s the stuff that we’d rather have on top of our existing services," Gottlieb said in a media statement earlier this week. It looks as if Mobile5 will now provide mobile services to its new owner’s EMEA agencies network.
And the second reason? That’s more strategic and tied up with a rather different deal done by Omnicom on the other side of the Atlantic.
Earlier this week the network signed a year-long contract with Instagram, the Facebook-owned photo-sharing service. How much the deal was worth isn’t clear – the amount was not officially disclosed and I’ve read figures ranging from between $40m and $100m; whatever, it’s a big deal.
This is the first time that Instagram, which has 150 million active users (60 per cent of them from outside the US), has signed a deal with an ad network. In fact, it’s only been taking ads since last year.
Essentially, Omnicom creative and media agencies will create “ads” (possibly in the form of sponsored photos or streamed advertising) which will be delivered to Instagram users.
A high level of media placement skills – not to mention sensitivity - will be needed if Instagram users (many of who have been muttering about leaving if Facebook tries to show them ads) are to be fully engaged. I have heard that Omnicom will be putting its best teams on this – so ads will be of very high quality creatively and almost “manually” placed, by tapping into the reams of data provided by Facebook.
Instagram’s tentative moves into advertising have, by all accounts, been pretty successful. But they’ve all been within the US and - given almost two-thirds of Instagram users are elsewhere – to really make the deal work on behalf of clients on a global basis, Omnicom will have to use or acquire local talent. This is where a UK-based agency like Mobile5 comes in.
Also, whilst Instagram is available on the desktop, it’s primarily a mobile service (which is what prompted Facebook to pay $1bn for it back in 2012). Again, for the tie-up to work properly, Omnicom will have to ensure that it has people with experience in, and understanding of, mobile as a channel and a space. And again, this is where an agency like Mobile5 excels.
I can see Omnicom making similar acquisitions in other territories in the coming weeks and months as it seeks to ensure its media agencies rule the mobile space. Unless, of course, another network has other ideas…
Tony Walford is a partner at Green Square, corporate finance advisors to the media and marketing sector.