Share to grow further

With a market share of around 22 percent of the Swiss media business, Switzerland's largest media agency OMD has been standing in its own way lately. "Some clients didn't even invite us to their pitches anymore because we were already handling one of their competitors," reported Chairman of the Board Peter Kettiger at yesterday's press conference. In other words, OMD, which has grown much faster than the Swiss advertising market over the past five years, has reached the limits of its growth in this country. But the Zurich agency is internationally networked and belongs to the advertising holding Omnicom, which has made provisions for such situations: Since 2005, Omnicom has been building up a second, worldwide media network alongside OMD with PHD . PHD - the three letters stand for the British founders Pattison, Horswell and Durden - therefore already opened its own Swiss branch at Thurgauerstr. 54 in Zurich last December (see also OMD strengthens with new brand). The office is thus the 74th PHD branch in now 63 countries. PHD Switzerland is headed by 44-year-old Dominik Hofstetter, who previously managed OMD's Sky unit. With Hofstetter, the entire twelve-strong Sky team, including almost 20 customers, is also moving to PHD. With one exception: Sky customer Apple is being transferred to OMD North because it does not fit into the PHD network for competitive reasons.

Sky team is a perfect fit for PHD

Hilary Jeffrey, president of PHD Europe, Middle East & Africa, said he was pleased that PHD can now offer customers in Europe "nationwide support." He said PHD is focused on providing clients with exceptionally creative and innovative media solutions. "The team in Switzerland is a perfect fit for our culture and philosophy and is an excellent addition to our network family," Jeffrey said. In addition, Hofstetter's team was already serving some international clients who are also with the PHD network (Peugeot and Citroën, for example).

OMD Switzerland becomes Omnicom Media Group

However, the launch of OMD's sister agency PHD necessitated a restructuring and a change of name: OMD Switzerland has been operating under the new name Omnicom Media Group since the beginning of the year. However, the ownership structure remains unchanged: 51.25 percent of the share capital remains in Swiss hands, the rest is international capital. The Omnicom Board of Directors also continues to consist of Peter Kettiger (Chairman), Geri Aebi and Matthias Kiess, while the Omnicom Executive Board consists of Manfred Strobl (CEO), Beat Krebs (COO) and Marion Wagner (CFO). However, Omnicom now has two public companies under its control, which it owns 100 percent: OMD AG, again with Strobl as CEO, and PHD with Exective Managing Director Hofstetter. Both companies are operationally independent, Kettiger emphasized, but they purchase services such as IT, purchasing, and accounting from Omnicom. "So they will operate separately in the market and will also compete with each other to some extent, but in the background they can still take advantage of the large purchasing volume or draw on certain specialists," Kettiger explained.

Is the separation of OMD and PHD strict enough?

The "trick" of launching a second agency in order to retain or gain competitors among clients can certainly work: The sister agencies m&m and mm&b in Glattbrugg have been practicing this successfully since the mid-1990s - but there with two CEOs who report separately to the board of directors of the m&m group. The situation is different at Omnicom: Strobl, who as OMD CEO should be Hofstetter's competitor, is at the same time as Omnicom CEO his superior. Hofstetter reports to him, not to the Board of Directors. Is the "Chinese Wall" between PHD and OMD really "tight" enough? Kettiger, Strobl and Hofstetter answer in the affirmative. And the Sky customers who are now switching to PHD seem to see it the same way. But whether Strobl's dual function will be appreciated by potential new customers remains to be seen.

PHD Switzerland among the top 10 agencies

Either way, the switch of OMD's Sky unit to PHD has consequences for the RECMA ranking, which previously showed a billing volume of EUR 422 million for OMD Switzerland. According to Hofstetter, PHD Switzerland will now deduct around EUR 100 million from this figure. According to the 2011 ranking, OMD thus remains the largest Swiss media agency, but is now closely followed by MediaCom with 301 million euros. Further down the list, however, there would be shifts, with PHD Switzerland coming in behind Mediaedge:cia (€102 million) in 8th place, ahead of the m&m Group with €79 million).
Markus Knöpfli