Advertising Age continued to examine PepsiCo shifting its global media business from Omnicom to Publicis Groupe via color commentary delivered by consultants, analysts, and industry experts.
What exactly qualifies someone to be labeled an industry expert? The ones who’ve worked in Adland are industry failures, no?
A closer look at the professional quips shows insights that could’ve been generated by AI—or any A-hole with minimal awareness of the field.
Appropriately enough, the identified consultants, analysts, and industry experts are White men.
What PepsiCo’s global media shift means for Omnicom
By Ewan Larkin
PepsiCo’s decision to move global media to Publicis Groupe—made without a formal pitch—diminishes one of the industry’s most durable client-agency relationships and takes some of the sheen off the new Omnicom.
Although significantly scaled back, Omnicom’s relationship with PepsiCo isn’t over; the holding company will continue to support creative, PR and sports marketing, the food and beverage company said. Still, Omnicom’s OMD has lost a top-three client with $1.7 billion in global spend last year, according to COMvergence, making it a significant financial loss. In the U.S. alone, OMD has roughly 130 people working on PepsiCo, Ad Age has learned.
Omnicom Media declined to comment on potential layoffs stemming from the account shift.
“PepsiCo had already become increasingly promiscuous on the creative side, regularly working outside Omnicom,” said a former PepsiCo executive speaking on condition of anonymity. “Omnicom tolerated those infidelities because media planning and buying was the far bigger prize. Now that prize is gone—and with it, a partnership that lasted decades.”
Of course, Omnicom could recoup that loss, and it has already notched wins with brands including Adidas, IBM, Subway and Novo Nordisk this year. In a statement, an Omnicom spokesperson called PepsiCo’s move “one client’s decision in a year in which Omnicom Media has built tremendous momentum as leading brands across multiple categories.”
“After an extraordinarily long and successful partnership, PepsiCo has decided to move its media business elsewhere. We are proud of the work we have done together over three decades as partners in innovation and impact,” the spokesperson stated. “Nothing about yesterday’s decision changes that.”
Ultimately, though, the blow extends beyond billings, experts said.
Omnicom’s relationship with PepsiCo has been an outlier in an industry known for client churn, and an especially rare one given the integrated nature and size of the account. As a result, the sudden shift will sting morale and perception just as much as its bottom line. Omnicom executives were officially informed about the media account move on Wednesday morning, according to people familiar with the matter.
“There’s some accounts that your business is built around. They’re almost part of the furniture,” said Brian Wieser, principal at advisory and consulting firm Madison and Wall. “Pepsi is one of those.”
“There can’t be very many billion-dollar-plus accounts that have this kind of tenure,” Wieser added.
PepsiCo is “a marquee account” for Omnicom, said Ruben Schreurs, CEO of media consultancy Ebiquity, comparing the PepsiCo shift to WPP’s loss of the Coca-Cola North America account to Publicis last year. “It was a very high-profile account, right? Every agency has only a few of those, and PepsiCo was absolutely one of those for Omnicom.”
While hardly a ringing endorsement of the deal, some industry experts stopped short of calling PepsiCo’s decision an indictment of Omnicom’s $8.9 billion acquisition of Interpublic Group of Cos. They said it was too anecdotal to draw any firm conclusions, especially considering that Publicis’ pursuit of the account may have predated the merger.
However, Jay Pattisall, VP and principal analyst at Forrester, said the shift is not a “strong vote of confidence in the integrated proposition Omnicom has been putting together” since acquiring IPG.
“What this suggests is the integration with [IPG data firm] Acxiom is still underway,” Pattisall said. “One particular client loss, although it’s a significant one in size, is not an indictment by any means of the strategy to acquire and integrate Acxiom, but it might suggest that it’s just not complete yet.”
In announcing its appointment of Publicis, PepsiCo emphasized the need to bring together “data, connected identity and technology across markets.”
Both Omnicom and Publicis “position themselves as a leader in media, technology, data—and AI to facilitate it—and Pepsi has chosen the one that it thinks has the superior offer at this stage,” Pattisall added.
An Omnicom spokesperson pointed to “approximately $4 billion in media billings awarded this year through a combination of incremental wins and retentions” as “evidence that its offer is resonating.”
“All of these decisions followed thorough, months-long review processes that included the major holding companies, putting the competing organizations through a rigorous test of their capabilities across data and analytics, AI technologies and transformation," the spokesperson stated.
Contributing: E.J. Schultz and Brian Bonilla
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