MediaPost presented more common sense posing as color commentary on the stunning PepsiCo media shift.
A spotlighted analyst provided obvious insights such as:
“…[O]ne can reasonably assume that pricing was a major factor.”
“…[M]arketers are focused on price and performance over transparency and control.”
“…[T]he loss could have more significant repercussions as it may lead to either more aggressive efforts with non-transparent trading activities, more significant investments in new capabilities or both.”
“…[M]any hundreds of people at Omnicom [are] likely to be laid off.”
Sorry, but delivering duh as expert opinion warrants layoffs at consultancies and analyst firms.
Analyst Sees Industry Shifts In The Wake Of PepsiCo’s Media Move
By Steve McClellan
Omnicom’s stock remains down about 6% since news broke last week that one of its biggest clients—PepsiCo—abruptly shifted its entire media account to Publicis Groupe without a formal review. Omnicom ran the account for 20-plus years.
According to the latest figures from COMvergence, Pepsi spent an estimated $1.7 billion on media in 2025. Of that total, Publicis had already been handling about $540 million, mostly attributable to the $500 million of spending in the Asia Pacific region.
Omnicom had about two thirds of the business, including the $780 million U.S. market.
PepsiCo has not explained specifically what led to the shift. But according to a rundown by analyst and marketing consultant Madison And Wall, “one can reasonably assume that pricing was a major factor.”
Which isn’t a big surprise, given M&W’s premise that generally, “marketers are focused on price and performance over transparency and control.”
According to M&W’s analysis, PepsiCo accounted for about 2.4% of Omnicom’s gross revenue last year—or approximately $400 million, which includes creative, media and other services. The lost media assignment probably accounts for under $100 million in gross revenue “unless principal-based trading was already a significant component of the existing relationship.”
While a nine-figure revenue loss is clearly a blow, Omnicom’s sheer size mitigates it to some extent. It’s a $26-billion-plus revenue company thanks to its acquisition of IPG last year.
The PepsiCo media loss could be made up for “in many ways,” per M&W. Strategically, the firm added, “the loss could have more significant repercussions as it may lead to either more aggressive efforts with non-transparent trading activities, more significant investments in new capabilities or both.”
And to the extent that non-transparent activities helped Publicis offer better pricing to PepsiCo, similar tactics are likely to expand industrywide, M&W surmises.
The firm also believes there’s a high likelihood that WPP will retain its $1.7 billion Coca-Cola media account, currently in review, and likely win back TCC’s $800 million North America business, which shifted to Publicis in 2025.
The PepsiCo shift will affect jobs with “many hundreds of people at Omnicom likely to be laid off,” says M&W. The good news: Many of those same people will likely migrate to Publicis, along with the PepsiCo business.
No comments:
Post a Comment