While retail and commerce media are major focal points for all the big agency holding groups, Omnicom has made one of the most notable acquisitions in the space, with its $835 million acquisition of digital commerce business Flywheel nine months ago. And Omnicom says this investment is already paying off, as Flywheel’s ability to target media and demonstrate outcomes using transaction data is helping the company win media pitches.
Speaking on an earnings call following the group’s Q2 results, CEO John Wren said that Flywheel is helping the group launch new measurement and targeting capabilities for its clients. He pointed to a collaboration with Amazon Ads announced at Cannes, which enables Omnicom’s media teams to access Amazon’s browsing, shopping, and streaming insights in order to tie linear TV and CTV investments to Amazon purchases.
“Essential to this partnership are Flywheels products and transactional signals, which are paired with Omni’s audience and viewership data,” said Wren. “This connection results in more effective marketing investments and increased ROI for our clients.” He also flagged Flywheel’s certification with TikTok Shop, which he says lets clients measure purchases linked to creator campaigns on TikTok.
Wren said he believes that the Flywheel acquisition has given his company an edge over its competitors, helping it to a “prominent position in the market” when it comes to commerce and retail media. And indeed, he said this in turn is playing a significant role in helping win new media accounts and defend its existing business.
“I think the key differentiator, in addition to having excellent people deployed, has been the decade-long investment and the progress that we’ve made in Omni [Omnicom’s ‘operating system’ which centralises data across the company for insights, planning and optimisation],” said Wren, when asked about his company’s hot streak with account wins and defences over the past 18 months. “And [Omni] doubled in terms of its capabilities and the information that we gather to provide insights with the acquisition of the transactional information that we got [through Flywheel].”
“Now the improvement that we have in how we measure the effectiveness of media coupled with the content production tools that we’ve now automated […] you’ll see that reflected in the media wins and loss charts that seem to get published or updated daily,” he said.
Measuring ROI for agency work
Omnicom’s investment in commerce media comes as part of a wider (very much related) push to make outcomes and ROI measurement for its own services a more central part of the company’s proposition.
Wren said that while he wouldn’t attribute new revenues to it yet, the same factors driving current account wins also contribute to its longer-term project “where we’re looking to outcomes and improving our client ROI”.
That is, Omnicom wants to do more to show the value its own work is delivering for clients, by demonstrating outcomes and measuring ROI. This could be an effective narrative to use against clients asking for agencies to drop their fees in order to win their business. It also ties in to another longer-term issue posed by AI’s growing role on both the creative and media sides of agencies’ work.
AI, through its efficiency, is already significantly reducing the time needed to execute creative work and media planning. But in cases where agencies are billed based on hours worked, they could actually lose out as a result of this efficiency. And even for remuneration models not based on time spent, clients may push to capture the monetary value of agencies’ AI investments through lower fees for themselves.
Wren has suggested that alternative billing models based on outcomes, or licensing models, may be required to ensure agencies capture AI’s value themselves.
There would be challenges with these types of models. Speaking on the earnings call analyst Michael Nathanson raised the question of determining the effectiveness driven by creative versus that driven by media (a familiar question for the advertising world). This would be particularly problematic in cases where a brand’s creative work is handled by a different holding company from its media.
Nonetheless, Omnicom clearly believes that for agencies, it’s vital that they’re able to measure ROI not just of their clients’ campaigns, but of their own work for their clients as well.
