Can Omnicom Close the Gap Against WPP in India?

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Omnicom competing against WPP in India


Omnicom to increase stake in Mudra Communications

Global network company Omnicom has held a 10% stake in the Indian company Mudra Communications for the past twenty years. Mudra Communications belonged to Reliance group and after the split between the brothers, it is owned by Anil Ambani group now. Omnicom, all of a sudden, has decided to hike its stake in the Indian company to a majority stake. What is the reason behind this move? Of course this move will help Omnicom to invest more in support, services and people. John Wren, President & CEO of Omnicom is busy in chalking out his Indian strategy now. He is not revealing what stake Omnicom has in Mudra Communications right now or the price paid by it to hike his stake in the Indian company. All that John Wren says to the media is that Omnicom is scouting for opportunities to increase its presence in the Indian market place to grow faster and create more opportunities in India. John Wren was in India recently for the AdAsia event.

John Wren confident

One possible reason for John Wren’s decision is about the growth prospects in India. Even when the US and European economies are struggling with economic crises, India is posting a decent growth in its economy. Now days, the Western corporate chiefs are driven more Eastwards to capitalise on the opportunities. This could have driven Omnicom to focus more on the East. By East, the Western corporate world means China and India. John Wren used humour to describe Omnicom’s hike of stake in Mudra Communications. He stated that it was a difference between having a steady girl friend and marrying her. Now that the marriage has taken place or is going to take place soon, what is the future for Omnicom in India?

All sports channels have gone digital

Omnicom sees tremendous opportunities in India. There is a tremendous talent available among the employees and executives of Mudra Communications headed by Madhukar Kamath. Omnicom is confident of building up more clients with the help of this talent pool. Omnicom believes that a joint venture that has the right balance of local clients and international clients in its repertoire will work well. Omnicom also has the view that two years from now, everything is going to become digital. Already the major Sports Channels in India like ESPN, Star Sports etc have gone totally digital and cannot be seen in ordinary TVs. Set-top boxes are needed to see them in TV. Young people are technology oriented and India’s population comprises of more youth than aged, unlike in Europe or Japan. Digitalisation involves training and imparting technology to the employees.

Revenue from Asia increasing

Mudra Communications is one of the biggest domestic advertising companies operating in India for quite a long time. Omnicom is a US based $12.5 billion advertising giant. Omnicom is now looking to set the Mudra Communications Board to comprise greater talent and better resources. Omnicom will also introduce more brands from its stable across retail, public relations and digital. Omnicom is targeting to make India as one among its top five markets in the world. In Indian market, Omnicom will have to battle Martin Sorrell’s WPP which has the first mover advantage in India. Omnicom’s third quarter results, released recently, revealed that the company is deriving 22% of its revenues from Asia and Latin America as against 18% in the corresponding period of the previous year.

1000 employees and 26 offices

Mudra Communications has 1000 employees and 26 offices in India. With the acquisition of Mudra, Omnicom will have access to 23 Indian cities. Omnicom wants to include as many blue chip companies in India as possible as its clients in future. Omnicom has introduced only eight brands in India out of more than hundred brands. Omnicom launched in 2007 its media services arm OMD, creative agencies DDB Mudra and BBDO. Omnicom wants to make Mudra a global brand. This means the partnership between Omnicom and Mudra will be extended beyond India. Initially it may spread to Asian continent and later worldwide. Omnicom has other important brands worldwide like TBWA Worldwide and public relations companies such as Fleishman Hillard and Brodeur Worldwide. It was through DDB Worldwide that Omnicom held 10% stake in Mudra Communications since 1993.

Anil Ambani will offer his expertise

How is Omnicom going to compete against WPP in India? Omnicom is not worried about competition. It has already closed the gap with WPP in China. It will be following the same strategy in India also though there are lot of differences between Chinese market and Indian market. Anil Ambani is going to join Omnicom’s Global Advisory Committee and will offer his expertise on Indian market for Omnicom to grow. Mudra Communications handles some of the top brands in India like Aircel, Asian Paints, Volkswagen, Air India and Phillips among others. Mudra Communications is spread across four agency networks namely DDB Mudra which works on influence and behavioural change, Mudra India which is focussed on communication and branding, Ignite Mudra which focuses on partnerships for entrepreneurs and Mudra Max which deals with experience and integrated engagement.

Publicis Groupe tripling its size in India

Many more Western advertising agencies may also flock towards the East to spread their wings, taking a cue from Omnicom. Already the French communications group Publicis Groupe is considering tripling its size of business in India. Its CEO Maurice Levy stated this. Omnicom’s multi channel marketing agency network RAPP is relying on building verticals-based model to drive growth in India. It has added 12 businesses across 18 categories in India in the last one and a half years. Globally, it has created eight specialised verticals by industry category. Digital work contributed a negligible portion two years back, but today it contributes 40% of the revenue. The future is undoubtedly in digitalisation.

Colgate and Unilever are in WPP’s folds

Omnicom’s second quarter income increased by 13.1% to $275.1 million from $243.3 million in the corresponding period of the previous year. Globally, Omnicom is in competition with other companies like Publicis Groupe, WPP and IPG among others. In India, WPP is far ahead of Omnicom. The reason for WPP being ahead of other advertising companies is because of the fact that they captured the business of Colgate and Unilever, two of the largest multinational companies operating in India when they bought out Ogilvy & Mather, JWT and Y&R.

Ogilvy & Mather pushed up Fevicol through innovative ads

Omnicom is forward looking in this modern technological world to assess its realistic chances of forging ahead in India and the world. Out of the 7 billion population of the world, 5 billion have access to mobile phones. 2.5 billion have internet access without landline. It is here that Omnicom sees its prospects. Advertising is a big game. It can make or mar the fortunes of a company. Omnicom handled the Whisper advertisement of the multinational company Procter & Gamble and established it as a market leader in its segment. Ogilvy & Mather shaped up the fortunes of Fevicol in the eighties and nineties through innovative advertisement. For reading about this story, please click the link on Pidilite Industries (manufacturer of Fevicol brand of adhesives) in the links section below. On the other hand, a poorly created advertisement can develop disgust among the people. Take for example, an advertisement displayed in TV regarding a peppermint. When a male takes the peppermint from his pocket, a female jumps into his chest because of the peppermint smell. I don’t know which advertising agency created this ad. It should have been created with a sense of humour. But it created disgust among the viewers. Women are predicted in this advertisement as very cheap, ready to jump into the folds of a stranger male just for having a peppermint. On the other hand, Fevicol advertisement that a hen is unable to hatch its eggs because the eggs refuse to break also displays good humour but very enjoyable. If innovation, technology, sense of humour and seriousness of the purpose are displayed, that advertisement will win the day and will make the product as a market leader. Corporate world cannot survive without advertising and advertising companies. Omnicom has bright prospects in India.

Omnicom focuses on India

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