As the world’s number 1 media agency, with billings amounting to US $21.3 billion, potentially overtaking Germany’s market leader Mediacom, things are looking bright for media agency OMD (owned by Omnicom).
HORIZONT Online speaks to Florian Adamski, CEO of OMD Worldwide who has led the global agency for 4 years, and Susanne Grundmann, who was appointed CEO of OMD Germany in early 2020, to find out what drives their success.
Mr. Adamski, OMD has been on the winning track in terms of relevant rankings from RECMA and COMvergence for several years. Does Germany play more than a small supporting role in this?
The answer is yes – with an exclamation mark! Germany’s management is causing a sensation worldwide and are an absolute driver of innovation at OMD.
We recently had an interview with Frank-Michael Schmidt, CEO of WPP subsidiary Scholz & Friends. Schmidt says for most networks Germans are still sitting at the side table.
I can confirm that with many companies and networks, Germany still has a kind of special role. I wouldn’t call it a side table, but U.S. and English managers in particular often have a hard time with the German mentality and culture. People take the revenues and returns from Germany, but in fact the German influence in the networks does not correspond to the profit contribution. It’s different at OMD, where German managers also sit in important global positions. Think of Oliver Stroh, who is based in London and, as Chief Development Officer EMEA, drives the development of innovations at the European level.
And OMD Germany?
Germany has gained a completely different standing in the network, due to wins such as Daimler, SAP, Allianz and Philips, and is an absolutely key market for OMD. People listen when Susanne speaks, when Paul Remitz (CEO, Omnicom Media Group Germany) speaks, when I speak.
The question, after all, is whether the three of you share a certain way of thinking?
We always try to point out that while short-term revenue and headline thinking might help you in the next pitch, in the long run, completely different things count. As pleased as I am that we are doing well in the RECMA and COMvergence rankings, what is even more important to me is that we have succeeded in improving customer satisfaction in 15 consecutive quarters (4 years), achieving absolute top scores in the industry. And you can only achieve this if you make sustained investments in capacities and competencies. German customers in particular, such as Daimler, SAP and Allianz, are no longer blinded by shiny objects, big headlines and smoke screens. They really go into deep dives and check in detail whether the agency can actually deliver what it promises. Every pitch win in this direction reinforces the approach that people like Susanne, Paul and I think to be the right one.
Ms. Grundmann, as head of OMD Germany, you have a lot on your plate – how great is the desire to get involved in international business?
Very great. Before I started at OMD Germany, I worked internationally with the OMD and Best of Omnicom network. I then joined OMD during the global Daimler pitch and as part of this, I traveled a lot to leading markets like China, where you can learn a lot about current trends in digitalization. I’ve always enjoyed working internationally and am happy that I have a lot of opportunity to do so at OMD.
How close is the collaboration on a global level?
It’s very close and intensive. At the end of the day, we work in a people business. If you are personally well networked, international cooperation is almost a matter of course. Another big driver is the monthly meetings with the CEOs from different markets and Flo’s team, where we talk about the central business issues and exchange best practices. In fact, these meetings also regularly focus on learnings and innovations from Germany. During the COVID-19 pandemic, our scores for engagement and recommendation have risen significantly, which is then of course a discussion on an international level. I am currently working on a group-wide talent management program. Global issues are part of my daily job.
You talk a lot about innovation. How does the culture of innovation at OMD differ from other networks?
We’ve stopped trying to constantly impress customers and the press with quick wins and are focusing on sustainable innovation development. In recent years, our competitors have invested billions in the acquisition of start-ups and specialized agencies. At first, that makes for nice headlines, but internally, it creates enormous pressure on revenues. The question is always who pays for the huge capital outlay in the end – and whether the customers don’t end up footing the bill.
«OMD prefers to make long-term investments in its own technologies, processes and talents, which results in a much faster integration of innovations.»
Ms. Grundmann, before joining OMD, you held management positions at Mediacom and GroupM. How do you find the interaction between Germany and the global headquarters?
At MediaCom, I was in the comfortable position of being able to choose an international role, and I also talked to other networks. But the combination of Flo at the helm of OMD and Paul Remitz as CEO of Omnicom Media Group was ultimately the ideal combination for me. I certainly wouldn’t be in my current role if Paul and Flo hadn’t paved the way for me to join the group and given me the opportunity to contribute my skills beyond the German network. On top of that, Omnicom has a very decentralized setup. I think it’s a massive competitive advantage over other networks that we work much more in integrated teams within the group and at the same time, as a brand, have the opportunity to develop our own capabilities. Take areas like social and search, for which we have organically built our own capabilities. At Omnicom, the individual agencies have much greater creative freedom than at other networks.
Nevertheless, the pressure on OMD’s returns is unlikely to be any less than that of other media networks.
There are massive differences. Group M tends to be driven by short-term financial KPIs, whereas at OMD, I experience a much stronger orientation towards long-term and sustainable performance. If you look at the rankings, the number of awards, and especially our far above-average customer satisfaction scores, this approach is clearly working. This gives me the opportunity to continue investing in talent, future topics and infrastructure even during a pandemic. And that is exactly what we have done.
When you talk about innovation, it’s usually about tech?
Data-driven work and technology are among the leading fields in which we invest heavily. But Omnicom and OMD in particular also champion a topic that is unfortunately discussed far too little: Creativity! This has always been the case internationally, but there has also been a remarkable development in Germany: OMD Germany has never won so many awards than under Susanne’s leadership. One example is the work for McDonald’s. The new thing on a global level is that we no longer set up special teams to make sure we win as many awards as possible. I’ve simply done away with this tactic of optimizing submissions, which is very common in the industry. The fact that we are still by far the most successful media agency worldwide in creative rankings shows that it’s possible. The goal must always be to implement the topics that are important to our clients as creatively as possible. We know that creative solutions lead to better business results.
I’m really passionate about communications and brands. I am convinced that a holistic approach is becoming increasingly important. In addition to a strong consulting approach, this also includes topics such as creativity and a deep understanding of target groups. We talk to people, not pixels. That’s why we pursue a ‘target group approach’ in which empathy plays a central role and with which we clearly differentiate ourselves from other media agencies.
When it comes to content creation, do you work more closely with creative agencies or is the aim to increase your own efforts in this area?
It’s both. We are currently bundling our content activities in a new unit, for which we have very ambitious plans. Especially in the digital area, it’s absolutely imperative to think of media and content creation holistically right from the start. However, OMD Create’s goal is explicitly not to compete with creative agencies.
In your view, what are the most important issues for the post-pandemic world that media agencies need to find answers to?
I’ll give you an answer where you’ll say: You’ve been telling me that for 15 years now. And that’s true. But the facts simply speak a clear language: there have never been so many integrated advertised pitches as in 2021. This development has really taken off. Daimler is integrating PR into its marketing activities, and Philips is also taking an integrated approach to PR, creative, media and data analytics, to name just two examples. The pandemic has resulted in clients breaking up their own internal silos because they have understood the need to merge the different data streams. At the same time, there is a demand from companies to increase the effectiveness of marketing spend.
What does that mean for media agencies?
If we’re honest, we have to admit that agencies have built up partly redundant structures across different disciplines over the years. In other words, clients pay fees to PR agencies, media agencies and creative agencies, some of which may not represent identical fields, but some of which overlap. I am convinced that not only integrated planning, but also integrated execution of communication campaigns will become a huge topic in our industry.
What other key themes do you see for the next couple of years?
The second key theme is, of course, the end of third-party cookies. I am convinced that we are on the verge of the biggest revolution in marketing. Google has just pushed this revolution back a bit, but that doesn’t change the fact that it’s coming. Clients, agencies and service providers that will be able to effectively play out data-driven communications in a cookie-free world will have a radical competitive advantage. Those who crack this nut will grow exponentially.
Why do you think Google has delayed the end of third-party cookies until 2023?
Because a large number of big clients and market players have signaled that they are not yet ready and are very worried about efficiency losses. There have already been test scenarios – with the result that some of the ROIs have fallen into a bottomless pit.
What will change with the elimination of cookies? What is OMD’s response to this development?
Life becomes more complex without cookies, which also means there will be a greater need for clients to consult with us. As for OMD’s response, I’d like to elaborate a bit.
Sure, go ahead.
Over the past few years, we’ve been asked time and again by customers and market participants: why don’t you do it like the other networks and buy data companies on a large scale? Our mantra was: Because we don’t believe in becoming ‘data traders’. We believe in remaining communications experts, and even more so than before. When you buy data companies, you trigger internal sales pressure and have to prove to customers that you have better data than they do.
So what is OMD’s approach?
For me, there are three key points. First, building first-party data. Companies need to bring together existing data and harmonize technologies. OMD can help here because we have an objective view of things and don’t have to market our own technologies. In addition, the data is enriched through smart partnerships with publishers, including Google and Facebook.
Second, contextual data. I’ve never stopped believing that the environment is relevant to the advertising impact of a campaign. That’s also rightly one of the core criticisms of programmatic, where you never really know where an ad will actually be played. So: Context is back in vogue!
Third: Fresh data! The problem for those who have spent vast sums buying customer data in recent years is that it is largely pre-pandemic data that is completely out of date. Again, this comes back to an issue we talked about back in the 90s: Single Source Panels. In fact, we are just introducing OMG Signal, where we are building on panels with many thousands of participants from different countries. In general, with the end of third-party cookies, the question of how to strategically handle data is coming back into focus. It is once again much more important to have smart experts who understand how to apply different techniques and methods – instead of telling a robot: go out, collect as much data as you can, and pretend you have the consumers’ consent.
Is that also the way forward for Germany, Ms. Grundmann?
Absolutely, I stand by our Omnicom and OMD approach 100% and am convinced that individual solutions will become more relevant for customers again. But that also means that it will become more challenging for companies. Instead of relying on accessing thousands of pieces of data and driving everything in an automated way, what’s needed are really sound analyses and intelligent approaches. And to add to what Flo said: I’m convinced that in the future, geographic data will also play a much more important role than it currently does.