Omnicom strengthens retail media capabilities through Flywheel Digital acquisition
Omnicom strengthens retail media capabilities with Flywheel Digital acquisition, a $835 million deal reflecting the agency's strategic emphasis on performance media as a key driver for growth amidst declining cookie usage
Article Brief:
Flywheel Digital, an e-commerce firm, has been acquired by Omnicom for $835 million from Ascential, as announced in a news release. The transaction is anticipated to be completed in Q1 2024, pending approval from shareholders and regulatory authorities.
Launched in 2014, Flywheel offers solutions to enable numerous brands to effectively sell their products on popular digital platforms like Amazon, Walmart, and Alibaba. These services encompass commerce operations, media execution, and market intelligence, all of which are supported by the Flywheel Commerce Cloud.
With approximately 2,000 employees, Flywheel will now function as a practice area within Omnicom under the leadership of Doug Painter, the former CEO of Ascential. Omnicom aims to merge Flywheel's extensive transaction data with its own audience and behavioral insights, leveraging the growing importance of retail media.
Article Insight:
To enhance its performance marketing and retail media capabilities, Omnicom is expanding its portfolio with the acquisition of Flywheel. Flywheel is a company that handles a significant number of product sales and manages billions of dollars of ad spend each year for top consumer packaged goods (CPG) marketers such as Procter & Gamble, Unilever, and Clorox. This acquisition comes after Flywheel was recently positioned as the leading digital brand by Ascential. As part of this strategic move, last week, 11 businesses that were previously under the Ascential Digital Commerce unit were integrated into Flywheel.
Amidst the pandemic, ad-holding groups have shown a strong interest in performance media and e-commerce companies as consumer online shopping surged. Retail media networks, which utilize first-party shopper data to enhance targeted advertising for CPG marketers, have also gained popularity with the impending deprecation of third-party cookies. However, recent macroeconomic pressures, such as rising interest rates, have slowed down M&A activity in the agency sector. This makes the Flywheel deal significant in terms of its size and scope.
Omnicom CEO John Wren, in a press statement, noted that research forecasts global e-commerce sales to rise by 50%, reaching a total of $7 trillion over the next two years. This data highlights the potential growth opportunity that Omnicom recognizes. According to an investor presentation by Omnicom, Flywheel generated approximately $300 million in revenue for the 12-month period ending in June 2023.
"The acquisition of Flywheel greatly enhances our presence and influence in the rapidly expanding digital commerce and retail media sectors, which are two of the industry's fastest-growing areas," stated Wren. "By combining our offerings across retail and brand media, digital and in-store commerce, and CRM, we will seamlessly integrate and deliver exceptional results for our clients."
Omnicom aims to combine Flywheel's valuable transactional insights, cultivated through its relationships with over 4,500 brands, with its own expertise in first-party data and commerce. Last autumn, the agency network introduced Transact, a connected-commerce consulting and online retail services offering.
Omnicom reported its Q3 earnings earlier in October. Organic revenue growth, a key measure of agency health, was up 3.3% year-over-year to $3.58 billion, slightly above analyst estimates.
