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Omnicom’s big India move: buys 51 pc stake in Mudra

Omnicom’s big India move: buys 51 pc stake in Mudra

Author | Noor Fathima Warsia | Monday, Oct 31,2011 1:27 PM

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Omnicom’s big India move: buys 51 pc stake in Mudra

Even though US-based holding company Omnicom Group and Anil Ambani-owned Mudra Communications have had on-and-off conversations for some time now, Omnicom Group is finally in the process of upping its stake in Mudra Communications. Omnicom would be taking a 51 per cent stake in Mudra, and it is understood that subsequently this could even result in a complete buyout.

So far, Omnicom has held a 10 per cent stake in Mudra Communications.

While official comments were not forthcoming from either Omnicom or Mudra Communications, sources informed that the deal was “as good as done”.

This is Omnicom’s biggest push in India after 2008, when it had launched OMD and BBDO in India and had bought out TBWA\India. Even though the financial details are not known, some industry observers see this as Omnicom’s single biggest investment in India so far.

Meanwhile, Omnicom also said that Anil Ambani, Chairman of Reliance Group, would join the Omnicom international advisory committee.

Bridging the Gap
This move would play a significant role in increasing Omnicom Group’s foothold in India. At present, even as Omnicom is a close rival to WPP internationally, in India, not only WPP but also the likes of the Interpublic Group (which has brands such as Lowe Lintas, McCann Worldgroup and DraftFCB Ulka in its creative offering and Lintas Media Group and Lodestar UM as its media assets) are far ahead of Omnicom.

Omnicom’s creative brands in India include BBDO India and TBWA\India. It has held a minority stake in DDB Mudra and RK Swamy BBDO. Its media asset is Omnicom Media Group that holds media agency OMD India. Omnicom also has presence in PR through Fleishman Hillard and Sampark Ketchum.

Contours of the deal are not clear yet, but sources informed that Omnicom’s Mudra buyout would apply to all Mudra Communications businesses in India. This includes four key business units – Mudra India (Branding & Communication), DDB Mudra (Influence & Behavioural Change), Mudra Max (Integrated Engagement & Experience) and Ignite Mudra (Partnerships for Entrepreneurs).

Mudra India has five strategic business units – Mudra West, Mudra South and Mudra North & East. It also has Water, a strategy & design specialist, and Maatra, a localisation & pre-media specialist. DDB Mudra comprises four strategic business units – DDB India, Tribal DDB India, RAPP India and DDB Health & Lifestyle. Mudra Max consists of 16 strategic business units that provide clients seamless solutions across a wide array of media touch points. Ignite Mudra, a specialist agency, caters to the brand building needs of entrepreneurs across geographies.

Mudra was founded in 1980 and Omnicom began its relation with the agency in 1990. Mudra today has over 1,100 employees across 26 offices and its footprint covers over 175,000 villages and 4,000 towns.

The Big Questions
The deal will have ramifications as it takes shape. The first question clearly is the impact that this deal would have on the existing Omnicom brands, especially the media agency brand. “Media part of the business allows synergies of volume, and there is no reason for Omnicom to not explore that option too,” said a media agency head.

At present, no changes are expected in the management of Mudra Communications due to this deal.

Another senior advertising agency professional noted, “Mudra has scale in India and Omnicom can consider it to be a centre for Omnicom’s India operations. Mudra has many capability sets that the other Omnicom agencies can benefit from, so they could look at taking that option as well.”

Omnicom’s Good Year
A senior industry source stated, “The writing was on the wall. Mudra has structured and expanded itself very aggressively in the last year. The growth of the agency in various domains, the rebranding done in 2010 and the focus on recruiting senior talent and growing individual businesses have all contributed to making Mudra an attractive agency network to associate with. Mudra’s performance on international award platforms too would have added to this.”

Omnicom Group has seen a positive third quarter, where its profits were up by 16.7 per cent to $203.7 million, compared to $174.6 million in the same period last year. Speaking to analysts at a conference earlier this month, Omnicom CEO John Wren was quoted on the statement that over 22 per cent of Omnicom’s revenue was currently coming from Asia, Latin America and developing markets, versus 18 per cent this time last year.

Mudra Communications was one of the few Indian agencies in a market completely dominated by multinational players such as WPP, Interpublic Group, Publicis Groupe, Havas, Aegis and Dentsu, amongst others.

According to the company website, Mudra Group clients include Aircel, Amrutanjan, Amway, Bank of Baroda, Bajaj Allianz Insurance, Castrol, Dabur, Disney, Emirates, Electrolux, Femina, Future Group, Godrej, HBO, Henkel, HP, HPCL, Hindustan Unilever, ITC, Jet Airways, Johnson & Johnson, Jyothy Laboratories, Kalpataru Real Estate, Larsen & Toubro, LIC, Lonely Planet, Madura Garments, Max New York Life, Novartis, Panasonic India, PepsiCo, Philips, Paras Pharmaceuticals, Reliance ADAG, Samsung India, Shell Foundation, Spice Mobile, TTK, The Economic Times, UNICEF, Uninor, Union Bank of India, United Spirits, Vaibhav Empire, Virgin India, Volkswagen and Wrigley.

 

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