INTERVIEW: Omnicom Seeks Digital Acquisitions In Asia

22nd Jun 2010 20:57

By Ruth Bender Of DOW JONES NEWSWIRES CANNES, France (Dow Jones)--U.S. ad giant Omnicom Group Inc. (OMC) is looking for digital acquisitions in Asia, but organic growth is still key to boosting digital advertising activities, the chief executive of Omnicom Digital said Tuesday. "We're always looking for acquisitions, but clearly we've focused on organic growth," Jonathan Nelson told Dow Jones Newswires in an interview at the Cannes Lions Advertising Festival. "We're very interested in Asia right now, in particular China and India...there's a lot of growth out there and a lot of client interest," he said. All major advertising holding companies, such as WPP PLC (WPP.LN) and Publicis Groupe SA (PUB.FR), are eyeing emerging markets and notably Asia for future expansion as advertising spending is booming in such regions. According to Nelson, a lot of growth in the digital ad space will come from Asia. But the U.S. and Europe will continue to grow, too, especially with areas such as mobile advertising driving growth, he said. "The mobile advertising market has just been formed...and social advertising is starting to pay, too." Omnicom last year created Omnicom Digital to oversee its digital acquisitions, develop new technologies and house some of its digital start-up businesses. The U.S.-based group, the world's second-largest advertising company by revenue behind WPP, in the past has developed its digital activities mostly through organic developments, such as with the creation of digital agency Tribal DDB. "What's crucial now to developing digital further is hiring talent," said Nelson. Increasing digital revenue organically tends to be a slower process than making deals, and investors are anxious to see more of advertising holding companies' revenue coming from digital as marketers increasingly shift their money to the Internet. Building digital firms can be tough though as digital talent in the ad business still remains scarce. "You see us do much more organic, which doesn't mean we're not doing acquisitions," he said. "I think that's a trend we'll see more of...with Razorfish being bought, there's not a lot of companies of scale left to buy." Publicis last year bought digital agency Razorfish from Microsoft Corp. (MSFT) for $530 million. Industry insiders say Omnicom has recently fallen behind its biggest rivals WPP and Publicis in the race to bulk up digital revenue as it shied away from making large digital buys. But Nelson says Omnicom is still in the race among the top, notably because it started investing heavily from very early on. "We made multiple significant investments back in '97...that's when the digital starting gun was fired at Omnicom," he said. Omnicom, which owns BBDO Worldwide and DDB Worldwide among other agencies, doesn't disclose how much of its revenue comes from digital. Its clients include Anheuser-Busch InBev NV (BUD, ABI.BT) and PepsiCo Inc. (PEP). -By Ruth Bender, Dow Jones Newswires; +33 1 40 17 17 54; [email protected] (Suzanne Vranica contributed to this article.) (END) Dow Jones Newswires June 22, 2010 15:57 ET (19:57 GMT)