The World: Omnicom turns PHD into a worldwide network

The group needs a second global media offering to remain a serious competitor to WPP and Publicis.

Speculation has been buzzing back and forth between London and New York for some time now over when Omnicom would accept the inevitable and invest in the roll-out of PHD as a global brand.

That speculation has now galvanised into a plan of action, and an aggressive one at that: Omnicom has announced that PHD will be a global media network within six months. And while it hasn't ruled out making a bid for Aegis, its main focus is to concentrate on growing its existing offering to support OMD in both the fight against client conflict and, more importantly, against rival offerings from WPP and Publicis.

The PHD brand isn't starting completely from scratch, of course. Founded in 1990 by the WCRS joint media directors, David Pattison and Jonathan Durden, and the FCO media director Nick Horswell, the UK agency is still a leading player on its home turf. Last year it branded itself as "the pioneering agency".

And for three years, PHD has built a successful presence in the US, with estimated billings in excess of the $4.8 billion in 2004. But it will still be an impressive feat to roll out across Europe and Asia before spring 2006.

Some territories will be easier than others, though. In Asia, there's an obvious solution in the shape of a ready-made regional Omnicom network, Mediawise, which will take on the PHD brand.

This second network has been developed over the past five years, boasts both local and regional clients and has offices in a number of the key territories, including China, Hong Kong, Malaysia, Australia and New Zealand.

Mike Cooper, the chief executive of Omnicom Media Group Asia- Pacific, says: "It's incredibly timely that we're going about this process now.

The agencies really want it. I think it's fairly straightforward. We're getting things physically into place and the next step is bringing people together and educating them about the brand."

But in Europe, while there are a number of countries where OMD occupies more than one building, there's no convenient local network looking for a new name.

Colin Gottlieb, the Omnicom Media Group Europe chief executive, explains that teams from OMD offices across Europe will be picked to establish the PHD brand in each country. In the same way that he and Cooper have been moved up the ranks from OMD into their relevant Omnicom Media Group, so the chiefs of OMD in each country will be given an Omnicom hat and will be tasked with appointing one PHD and OMD local head to report to them.

Gottlieb is insistent that taking staff from OMD for PHD will be motivational and won't weaken OMD. "We don't need to disrupt the OMD brand. The great thing about the roll-out is that we have the PHD brand, which still reflects the vision of the founding partners. It's a vision which has already generated enormous enthusiasm from our markets," he says.

PHD also has a joker to play in the shape of its worldwide chief executive, Pattison, who'll no doubt be experiencing a jet-setting run-up to Christmas.

As a co-founder and an evangelist for the brand, his motivating presence is in great demand. Pattison has high standards. "We're not in the franchising business," he says. "I want every PHD office to be a PHD company, with the culture and values of PHD."

If it's taken longer than expected for Omnicom to bite the bullet and launch PHD on a global scale, it's because getting it right in the US first was critical to the success of such a venture. And Pattison's transformation of Advanswers, Creative Media and Pentacom three years ago into PHD in the US has been a success: in the first five months of this year alone, the company picked up $420 million in new business.

The managing director of Interpublic's Magna in the UK, Roy Jeans, points out that "Omnicom is run in an American style. We sometimes underestimate how important it is for a global company to get the American set-up right first."

Omnicom also needed OMD to be robust - a description that wouldn't have fitted until recently. "Why now?" Gottlieb asks. "We've come a long way since 2001, when OMD Europe was formed ... It is now one of the few real network players in Europe."

The PHD roll-out will be synchronised with the roll-out of Omnicom's combined buying point, OPera, the aim being to lessen the pressure for PHD to get big quick. There will also be investment in resources at group level for specialist operations, with the appointment of "tsars" to control disciplines including research and digital.

"With OPera in every market, we're actually launching with volume, so that's not something we're going to be pleading poverty on," Pattison says .

Omnicom will be hoping that PHD will generate worthwhile volume. But Nick Emery, the worldwide head of strategy for the WPP group buying operation GroupM, is sceptical that PHD will deliver: "Omnicom needs to address its media volume and ranking versus the other groups."

If Omnicom were to acquire Aegis, it would get that extra bulk. But, although it reportedly showed some interest in the company last year, it seems unlikely to enter the bidding at the current price. Both insiders and those looking on seem agreed that the cultural fit would not be a good one. And Omnicom has always sought organic growth.

Apart from avoiding the cost of an acquisition, growing your own can have other advantages, especially if you're looking to establish your network in a handful of months. "If you grow organically, you get the hearts and minds of the people more quickly," Jeans says .

THE STORY SO FAR

1990: The WCRS joint media directors, Jonathan Durden and David Pattison, and the FCO media director, Nick Horswell, form a communications agency, PHD

1996: Abbott Mead Vickers BBDO acquires PHD for £5 million, merging it with its media department, run by the AMV vice-chairman, Ken New. New PHD is born

2000: The media agency is shaken by a string of senior management exits: Jon Wilkins, John Harlow and Will Collin leave to form Naked Communications. Nick Horswell quits to found a consultancy. New departs to run Postar

2002: Pattison moves to New York to launch a US PHD operation

2005: Omnicom announces it is to launch PHD on a global scale by moving staff from existing OMD agencies to start PHD offices.

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