Credit: Jacob Hawk via Unsplash
Omnicom CEO John Wren has revealed the ammunition behind last month's Amazon win, said to be the world’s biggest media account.
“It was a complicated, long process because they were very thorough in what they did, and we invested a great deal of time and energy demonstrating to them what we could bring to the party,” he told analysts in a briefing.
Omnicom has released its September quarter results showing better than expected organ growth of 6.5%. The company now expects full year growth at the upper end of its previous forecast of 4% to 5%.
The Amazon win is a big one. Amazon in 2022 spent $US20.6 billion in advertising and other promotional costs, up from $16.9 billion the year before, according to financial statements lodged by the giant online retailer.
The pitch resulted in Omnicom Media Group running the US, leaving WPP with Europe and APAC.
Insiders say the process of the pitch, which took more than six months, included a third-party review by global media advisors MediaSense.
In a briefing post the release of Omnicom's September quarter results, David Karnovsky, executive director at J.P. Morgan Equity Research, asked Wren about the winning factors that gave Omnicom an edge.
“Amazon was just the largest win in quite a while, and quite phenomenal,” Wren told the analysts. “And we're very, very happy to have been selected, and proud of it.
“It proves a number of points. One is the solid relationship we had with Amazon coming off of the Flywheel acquisition.”
Omnicom paid about $US835 million a year ago to acquire Flywheel Digital, an ecommerce service enabling brands to sell more goods more efficiently across hundreds of digital marketplaces, such as Amazon, Walmart and Alibaba.
Flywheel, with a workforce of more than 2,000, provides services in retail commerce operations, media execution and market intelligence to more than 4500 brands.
Wren then said the acquisition of Flywheel significantly broadened Omnicom’s reach and influence in the rapidly expanding digital commerce and retail media sectors, two of the fastest-growing parts of the industry.
"We knew connecting marketing to sales would be a game changer for our company and our clients, leveraging and connecting the capabilities of Omnicom Media Group and flywheel," Wren said.
"We can now directly measure online retail sales generated from media campaigns across the full advertising journey, from broadcast TV to upper funnel, performance media and retail media."
He said Flywheel was first to the market before Omnicom acquired the company.
“We have a great depth of knowledge,” he said. “We have a lot of trust built up with the pioneers who have really blazed the retail trail because of our history.
“So I think we're in very good shape. Does it mean I have a monopoly in it? No, there'll be other pretenders that come to the market and we'll compete against them, but we'll compete successfully. Flywheel was, in fact, a decade ahead of the next closest thing.”
He told the analysts the skills, investments such as Flywheel and the internal insights engine Omni added up to an extremely strong media offering.
“And overall, from an Amazon point of view, this has created a real enterprise relationship between the two companies, and it's going to permit us to do other things as we go forward,” Wren said.
“There's no better demonstration of collaborative effort than the Amazon win.
“We're able to measure marketing spend for the very first time, and that's done with a rather important CPG client.
“We have proven that it's all measurable, and as we get other clients where we have the opportunity to do that, that's going to further distinguish Omnicom in terms of justifying media spend and ROI and investment.
“Anything you can measure, clients typically will sit and give you a very fair hearing about where to invest that money.
“The investments that we've made and where we've placed our focus have paid off and will continue to pay off, because we can distinguish ourselves in ways that we've never been able to do five years ago.”
The benefits from the Amazon deal won’t start to flow through until next year.
“When you're pitching a piece of business like that, it's expensive,” Wren said.
“The revenue will start in the new year. What we're currently doing is making sure that we're staffing up properly so no balls are dropped, and that is something that will continue through the fourth quarter.”
Wren also pointed out a string of wins.
“Our media group has been incredibly successful this year, and we have every belief that will continue to do that as opportunities come up,” he said.
Research consultancy COMvergence calculated OMG was awarded more than $US5.3 billion in client billings during the first six months of 2024.
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