What's in the Omnicom-Mudra deal?

By Anushree Bhattacharyya , afaqs!, New Delhi | In Advertising | October 31, 2011
It's evident that Omnicom wants to strengthen its foothold in the country through the Mudra takeover. But, what's more to this story?

Omnicom Group, the world's largest advertising network, has finally made an attempt to increase its foothold in India. Until now, Omnicom had a very shallow presence in the Indian market, with agencies such as TBWA India, BBDO India, OMD, and joint ventures such as R K Swamy BBDO, besides holding a 10 per cent stake in the Mudra Group.

But, it's better late than never! The company has decided to increase its stake in the Mudra Group, which is one among the top five agencies of the country. The controlling stake in the Mudra Group will allow Omnicom to strengthen its foothold in Asia's third largest market.

Currently, among the top five networks, WPP handles 57 per cent of the advertising business, while Interpublic contributes 17 per cent. Publicis Groupe and Omnicom handle another 11 per cent percent each while the remaining 3 per cent are with Havas Group. With Mudra's contribution now added to the Omnicom kitty, it's pie will increase significantly.

Timmy Khandhari, leader India, entertainment and media practice, PricewaterhouseCoopers, says, "Mudra has the ability to guide and pass content required by Omnicom to establish a strong presence in the country."

Meenakshi Madhavani, managing partner, Spatial Access Solutions, sees this as an opportunity for Omnicom to uncomplicate its complicated existence in the advertising business. According to her, so far, all Omnicom's holdings and cross holdings in advertising remained complicated except for OMD and TBWA, but now, with a majority stake in Mudra, the advertising group will be able to consolidate all its brands under one umbrella.

Prabhakar Mundkur, CEO (chief executive officer), Percept/H, voices a similar opinion. He says, "This deal would bring an opportunity for Omnicom to align its global clients under one roof in this country. And for Mudra, the deal brings access to international knowledge and learnings, along with the exchange programme that will help the local team broaden its knowledge."

Mudra certainly has a strong equity in the market, but the big question is whether Omnicom will retain the local values of the Mudra brand in this market.

Piyush Pandey, executive chairperson and creative director, Ogilvy South Asia, says, "Mudra gives local talent to the international company who are better positioned to run the Indian business. And if I have to speculate, then the group will retain Mudra, however the new identity could be a bit longer" he says.

Madhavani concurs that there is value in the Mudra name and this is one reason behind the acquisition, which is why Omnicom will retain the name, but, there is a chance of creating a combination name like that of Chaitra Leo Burnett.

However Khandhari strongly feels that Mudra might continue to operate as a separate entity under the global network.

He says, "The Mudra name has a strong patronage in the country, so there could be a possibility that it might function independently under the umbrella brand. Also, every company wants different agencies handling different clients, so going with this perspective, Omnicom may not try to play with Mudra's identity."

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