Omnicom: The World's Largest Advertising Conglomerate|Business Strategy|Case Study|Case Studies

Omnicom: The World's Largest Advertising Conglomerate

            
 
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Case Details:

Case Code : BSTR089
Case Length : 21 Pages
Period : 2000 - 2003
Organization : Omnicom Group.
Pub Date : 2004
Teaching Note :Not Available
Countries : USA
Industry : Advertising & Communication

To download Omnicom: The World's Largest Advertising Conglomerate case study (Case Code: BSTR089) click on the button below, and select the case from the list of available cases:

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"We are the people who take cosmic dust and turn it into a brand."

- John D. Wren, CEO, Omnicom Group, in March 2000.1

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Sweet Conquest

In mid-2000, a leading global automobile company Daimler Chrysler2 announced that it would consolidate the marketing and advertising account of its Chrysler, Dodge and Jeep brands so that it could be handled by one advertising agency. This 1.25 billion ($2.3 billion) marketing and advertising account was by far the world's single largest in the car category. Therefore, many leading advertising agencies eyed it with interest.

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The decision to hand it to a single agency led to a fierce battle between two advertising majors - True North, a Chicago-based advertising group (whose FCB Detroit agency had been handling global advertising for the Chrysler and Jeep brands till now) and BBDO, an advertising agency belonging to one of the world's top three advertising conglomerates, Omnicom Group (Omnicom). BBDO eventually won the account in November 2000. While pitching for the account, BBDO promised to cut down on back-office costs by reducing the number of back-office staff, thus saving more than $50 million for Daimler Chrysler. BBDO also agreed to create a separate business unit called PentaMark (as requested by Chrysler), to manage the Chrysler business and to hire top creative personnel from FCB Detroit.

The agency's readiness to fulfill Chrysler's request and the promised savings clinched the deal. According to analysts, Omnicom's client-centric work philosophy was one of the major factors that helped BBDO win this account.

In 2000, it had a diverse portfolio of marketing and corporate communication services that included advertising, media planning and buying, sports and event marketing, promotional marketing, digital and interactive marketing, database management, field marketing, public relations, marketing research, brand consultancy, healthcare communications and specialty communication services (See Exhibit I for a note on the advertising agency business). In 2000, Omnicom registered $6.2 billion in revenues, an increase of 20% over the previous year's revenues. For over a decade Omnicom had registered a double digit growth rate in revenues. Of these revenues, non-advertising revenues accounted for 56%, as compared to 30% in the early 1990s.

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1] "The 50 Best Performers," www.businessweek.com, March 27, 2000.

2] The world's third largest automobile company, DaimlerChrysler is involved in developing, manufacturing, distributing and selling passenger cars, light trucks and commercial vehicles. It also provides various services related to the automotive business. The company recorded revenues of €102.61 billion for the nine month period ending September 2003.

 

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