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Rediff.com  » Business » Omnicom, Magna set for India foray

Omnicom, Magna set for India foray

July 21, 2004 08:20 IST

Global media services players Magna Global and Omnicom are all set to foray into the Indian media-buying business by the year-end.

They will compete with WPP's media outfit, Group M, the largest player in India with considerable buying clout. The new entrants will also compete with the homegrown Madison Media.

Magna Global in India will be the negotiating entity for the three Interpublic Group media companies, Universal McCann, Initiative Media and Lodestar. These are the media arms of McCann Erickson, Lowe India and FCB Ulka, respectively.

Media outfits of TBWA Anthem and RK Swamy BBDO will come together to form Omnicom's Indian avatar Optimum Media Direction.

Mudra's media outfit, OMS, may also join the OMD fold. The combined share of the three companies will be at 26 per cent of the Rs 9,000 crore (Rs 90 billion) industry, making the entity the number two player in the media services business.

Group M's three media companies, Mindshare, Maxus and Media Edge CIA, are understood to have cornered around 30 per cent of the market, while Madison Media has over 7 per cent.

The Magna India head will be nominated from within the three agencies.

Lodestar president Sashi Sinha declined to comment on Magna's business model in India, but clarified that unlike the Group M model, which is a subsuming one, Magna Global has a collaborative business model.

Sandip Tarkas, CEO of Media Direction, the partner organisation of RK Swamy BBDO in India, confirmed the development, but declined to comment on the operations model of OMD. The combined billing of the three companies stands at Rs 600 crore (Rs 6 billion).

OMD is likely to be headed by Tarkas. The three creative agencies will each hold 25 per cent in OMD, with the remaining 25 per cent being held by Omnicom.

It is understood that both media services groups are looking at bringing other Indian companies in their fold. Sam Balsara, managing director, Madison Communications, said all groups had approached him for affiliation, but declined to give the details.

In the Magna Global business model, media planning remains with the individual agencies as part of their advertising process, while buying and negotiations are driven by Magna. In India, however, such a business model presents problems.

According to the Indian National Survey rules, agency-wise deals are prohibited and only client-wise deals are approved of. But given the Magna model, it would be imperative to first define how the media buying would be split so that it does not clash with INS rules.

According to Lynn De Souza, head of Initiative Media, Magna Global's business model is adapted to local market demands. Discussions to work out the details were in progress, she added.

Globally, Omnicom's model is similar to that of WPP. In both media groups, the media function is divorced from the creative function. The media outfit works as a standalone company for planning and buying functions.
Richa Singh in Mumbai