“Omnicom lands Bank of America” by Brian Steinberg, Wall Street Journal

Account Had Been Sought For Its Size, Concentration; Defeat for WPP, Interpublic

By Brian Steinberg

Published September 1, 2005

Omnicom Group won a hard-fought contest among three of the world’s biggest ad-holding companies for Bank of America’s strategically important marketing and advertising account.

Omnicom defeated a pitch from rival WPP Group, of Britain, and efforts by Interpublic Group, which had the account, to keep the business. The account has generated $60 million to $65 million in annual revenue for Interpublic.

All three wanted the contract because, unlike accounts at most big companies, it encompasses all of the bank’s marketing work, from traditional advertising to sports marketing, public relations and media buying. The concentration with one ad firm made the business strategically valuable for big ad-holding companies such as WPP and Omnicom. It gives them a chance to demonstrate the advantage of owning an array of agencies at a time when some marketers are questioning such efficiency.

Adding to the account’s allure are expectations that Bank of America, which has grown rapidly through acquisitions in recent years, is poised to become a major brand name in consumer marketing. It is the second-biggest bank advertiser after Citigroup and spent $306.8 million on media space and time last year, according to TNS Media Intelligence. Its advertising spending may rise as a result of its pending acquisition of credit-card giant MBNA.

Omnicom’s win will add fuel to a debate over how ad-holding companies should structure their pitches: whether to try to coordinate their different units at the corporate level, as WPP Chief Executive Sir Martin Sorrell advocates, or to encourage agencies to compete for business under their own name rather than the corporate mantle, as Omnicom favors.

“In this case, the client wanted to have stewardship from the holding-company level, and so we were willing to do that,” says Susan Smith Ellis, the Omnicom executive vice president who will supervise the Bank of America account.

In its 2004 annual report, WPP likened ad-holding companies to “super-agencies,” saying the big ad conglomerates can serve the needs of global advertisers that are growing through consolidation. But some in the ad industry question whether forcing ad agencies to work together is a viable approach in the long term, given the entrepreneurial personalities that tend to run them.

“The jury is out” on whether the WPP approach or the Omnicom philosophy is the better one for advertisers, says Arthur Anderson, principal of Morgan Anderson Consulting, a New York firm that works with advertisers.

WPP’s approach helped it land a number of important accounts recently, such as HSBC and Samsung. Bank of America required a coordinated approach, and Omnicom responded successfully — a sign that Omnicom is willing to change its approach if a client wishes.

For Interpublic, the loss of the Bank of America account is the latest setback for a company already struggling to deal with accounting problems. Interpublic has been the subject of a Securities and Exchange Commission probe since late 2002. While it is cooperating with the investigation, Interpublic hasn’t officially reported earnings since the third quarter of 2004 and must update its results for investors and creditors by Sept. 30.

Bank of America is the second large Interpublic client to pull business in recent months. General Motors said in May that it intended to move a massive media-buying account, with total spending estimated at around $3.6 billion, to France’s Publicis Groupe, effective Oct. 1.

“Bank of America has notified us of its intention to move to Omnicom and our agencies will continue to partner with them during a transitional period of up to six months. The bank is a great client, we are proud of the model we built together with them and we wish them well going forward,” Interpublic said in a statement.


Comments are closed.