Omnicom Group, a strategic holding company, was formed in 1986 by themerger of several leading advertising, marketing, and corporatecommunications companies. By providing professional services to clientsaround the world, Omnicom has grown to be one of the largest globaladvertising and marketing companies. Omnicom’s agencies provide traditionalmedia advertising, customer relationship management, public relations, andspecialty communications. The company’s business model is focused on clientrelationships and clients’ needs are the central focus in how Omnicomstructures its business offerings and allocates its resources. It carries outbusiness through three global advertising brands: leading U.S.-based nationaladvertising agencies, media services, and the Diversified Agency ServicesCompany. Omnicom’s global advertising brands include BBDO Worldwide,DDB Worldwide, and TBWA Worldwide. Omnicom Group has a long historyof mergers and acquisitions. In order to create a media conglomerate with theright balance of firms, the company developed an acquisition strategy to guideits formation. The strategy is focused on acquiring companies with anassembled workforce that has expertise in a specific area. This allowsOmnicom to continue to build upon the core capabilities of its various strategicbusiness platforms and agency brands. Expanding its geographic reach andservice capabilities allows Omnicom to better serve its clients. Key factors thatOmnicom considers when pursuing a potential acquisition are the competitiveposition and specialized knowledge of the acquisition target. In 1990, the groupestablished the Diversified Agency Services (DAS) division to identify andacquire the top players in their respective fields in the marketing andcommunication businesses. During 1996, the company made six strategicinvestments in leading digital interactive communication companies such asAgency.com Ltd., etc.The case looks at the in-depth look at Omnicoms growth in the context of theevolution of the advertising industry through the late-1980s. It underwent manylarge-scale structural changes. In 2003, Omnicom had emerged as the largestadvertising agency holding company in the world. These agencies wereorganized on the basis of strategic platforms client-centric networks,, operatinggroups and geographical regions. It received recognition for its strong financialperformance and its growth strategies.
The reasons behind the success of Omnicom were: Client centric network Flexibility to serve more clientsOmnicom showed strong credentials and successful track record. It was in avery strong position in the industry with respect to its ability to take advantageof the opportunities provided by the trends.LEARNING OUTCOMES Understand the need for global advertising agencies and the importance/role of mergers and acquisitions in the global expansion of advertising companies. Study the evolution of advertising agencies over the years. Understand the role played by an advertising agency in a companys advertising efforts. Client-centric approach helps a company to build its rapport with the global as well as local clients.RECOMMENDATIONS In the short-term, Omnicom should focus on preserving revenue streams and protecting against a further decline in revenues. In order to achieve this goal, Omnicom should reduce costs and focus on updating its business offerings to reflect the changing media environment. In order to diversify its offerings and enter new advertising markets, Omnicom has two options: strategically acquiring existing firms or expanding the services of its already-established agencies. Omnicom should set goals for entering new service lines and refine its mergers and acquisitions strategy accordingly. In response to the fragmentation of media, Omnicom should prepare its agencies to provide a complete package of services and advertising solutions for its clients.