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John Wren’s uncommon departure from his “construct, not purchase” technique at Omnicom Group to buy commerce buying and selling platform Flywheel for $835 million appears to be a career-defining wager for the long-running chairman and chief government.
“I’m not 30 anymore,” Wren, 71, mentioned. “If I’m going to vary the world, I’m going to need to do it shortly. I noticed that this was going to place Omnicom able the place it has a novel providing.”
Marketing campaign US caught up with Wren in a Las Vegas resort suite through the Shopper Electronics Present to debate the technique behind the Flywheel deal, Omnicom’s largest ever acquisition which closed on Jan. 2.
Duncan Painter, the previous chief government of Flywheel proprietor Ascential, who has now joined Omnicom, was additionally within the room, alongside Jonathan Nelson, chief government of Omnicom Digital.
The deal is a shocking transfer from Wren, who has established a repute at Omnicom for constructing tech and capabilities from the bottom up. Whereas rivals shelled out billions on knowledge companies, Omnicom has spent a decade constructing a knowledge and expertise backbone referred to as Omni powered by partnerships with main tech suppliers and retail media networks.
Omni allows consumer groups to plan, optimise and attribute campaigns in a single workflow. Its present suite of options are centered on the higher to mid funnel: Constructing consciousness and consideration.
Wren’s imaginative and prescient to remodel Omni right into a “distinctive providing” includes plugging the “lacking center” of gross sales conversion.
“All people, Omnicon included, has been centered on the higher funnel right down to the center funnel. A few of my brighter rivals have now arrange consulting practices which can inform you the way to get to the remainder of the funnel, however they nonetheless can’t ship on it,” Wren mentioned.
For this, Omnicom wanted visibility into gross sales—knowledge that’s difficult to onboard at scale, because the holding firm doesn’t all the time deal with a consumer’s full product portfolio. Specialist outlets devoted to managing product gross sales for purchasers throughout retail marketplaces have this perception in spades. Flywheel was one in every of round 40 outlets that Omnicom reviewed; the others “aren’t anyplace close to as built-in” as Flywheel, based on Wren.
Wren requested Omnicom Digital’s Nelson if he might replicate Flywheel’s capabilities after Nelson’s go to to the commerce firm’s Baltimore headquarters.
“[I said] whatever the funds you gave me, it will take me 5 to 10 years to construct what they have already got, as a result of it’s so intensive,” Nelson mentioned.
“That’s what sealed my conviction,” Wren mentioned. “As a result of I’m in a enterprise that if one in every of my rivals goes out and does one thing smarter than me, I’ll recognise it, I’ll reward them after which I’ll copy it as quick as I presumably can.”
Flywheel manages gross sales for 50 of the highest 100 client packaged items merchandise throughout 80 main retail marketplaces, together with Alibaba, Amazon and Walmart. It claims to be the biggest media purchaser on Amazon, managing eight of the highest 10 promoting retailers on the platform.
Fortunate for Flywheel, the lacking two retailers are purchasers of Omnicom.
However this deal is much greater than onboarding a number of further purchasers; Painter mentioned the mix of Flywheel and Omni’s capabilities might rework how Omnicom plans and measures promoting spend.
“By becoming a member of up with Omni, we will translate product SKU on the retail platform again to the viewers. For lots of manufacturers, the mystique of ‘did I get worth from my spend?’ shall be gone, as a result of we’ll have the ability to inform them whether or not they did or they did not,” Painter mentioned.
“Return on advert spend (ROAS) shall be a factor of the previous,” he added. “We’ll have the ability to transfer the business to a completely totally different set of metrics, the place it is going to all be about what I am spending and the way I’m creating that model presence to really obtain outcomes and repeat purchases.”
Flywheel will function as a standalone enterprise unit inside Omnicom, led by Painter as CEO.
All of Flywheel’s roughly 2,000 staffers will be part of the holding firm: Wren and Painter say the deal will result in “zero” consolidation of expertise.
Operationally, Omnicom Media Group’s commerce unit. Transact, will fold into Flywheel within the U.S. however will stay a separate entity within the remainder of the world. Flywheel may also minimize its outsourcing contracts and use Omnicom’s outsourcing hubs in India and Colombia.
The mixing of Flywheel’s product and transaction knowledge into Omni has already begun—groups from each corporations started getting ready integrations previous to the deal being finalised—although the total integration “will take us by way of the 12 months,” says Painter.
A advertising and marketing and gross sales firm
Wren has steered Omnicom by way of numerous evolutions throughout his practically 30-year tenure on the holding firm, together with adapting to the expansion of search, cellular and social media.
Including Flywheel’s retail capabilities will “rework Omnicom from being an promoting and advertising and marketing firm to a advertising and marketing and gross sales firm,” he mentioned.
He’s assured that purchasers will discover Omnicom’s new providing irresistible.
“I can beat anyone on a pitch if I can get the chance to point out them not my persona and the promise of what I can do, however the instruments and the capabilities that Omnicom now owns,” he mentioned.
Higher connecting advert spend and outcomes was a significant theme at CES 2024: Amazon talked about how will probably be in a position to convert advertisements on Prime Video into product gross sales on its flagship retail website; Disney unveiled new metrics and a shoppable advert format throughout its streaming providers; and NBCUniversal rolled out an AI-powered instrument that selects the advert slots throughout its portfolio almost definitely to ship towards advertiser targets.
These media giants are additionally investing extra in self-serve capabilities that threat encroaching on providers and reducing into the budgets of companies, which already confronted a difficult 2023 attributable to retracted spending from expertise purchasers. Omnicom’s natural development slowed however remained constructive in 2023, outpacing a few of its rivals.
Wren believes this implies companies should work more durable to show their price to purchasers: “Once you have a look at my business and what I believe’s going to occur to it, you are going to need to be able to show that in case you spend this greenback, you are going to get again two.”
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