ANALYSIS A Mars a day helps you… build your own retail media capabilities

The recent Publicis acquisition of Mars United Commerce and the Omnicom acquisition of Flywheel are reshaping the advertising world.

Publicis has a good track record of transformational acquisitions over the years, for example, digital shelf capabilities (Profitero), data (Epsilon) retail media tools (Citrus), digital marketing and tech (Sapient, Digitas, Razorfish over the years).

They have done it again with the recently announced acquisition of Mars United Commerce for $600m.

Mars United has been around for a while. It claims to be the world’s largest independent commerce marketing company with 1,000 employees and 14 hubs worldwide. It was founded 50 years ago with origins in shopper marketing. They saw the opportunity with digital commerce, content, retail media & went ‘all-in’ over the last few years. 

This is hot on the heels of another big advertising holding company, Omnicom, paying $835m for Flywheel from Ascential late last year. Flywheel had $300m of revenue and Ascential had paid an initial $60m for Flywheel in 2018, and added the other acquisitions over the years, such as Clavis (digital shelf analytics) Sellics (Amazon marketplace & retail optimisation), Perpetua and Whytespyder (Amazon, Walmart and Retail Media Network advertising operations and insights).

Life on Mars

Mars United offer the full range of commerce and retail media propositions:

• Retail Media – planning & buying, search
• Digital Shelf (content strategy to asset management
• Performance Marketing – conversion at top retailers through direct buys with performance media
• Insights to analyse and compare retail media performance results across retailers/partners in one place.

Its press release about the acquisition indicated some of their intentions:

• “Combine Epsilon’s 1st person identity data with Mars United’s proprietary data on shoppers + shopping behaviour to give clients 360-degree insights into purchase journeys”
• “Combine the scale of Publicis Media with Mars United’s comprehensive understanding of retailers – including media, marketing, merchandising, and operations to win the last mile of purchase in physical / digital
• “Performance & Measurement: Merging insights into ecommerce sales and operations from Profitero, Publicis’ digital shelf platform, with Mars United’s data set on commerce media impact will give clients a complete view of their commerce marketing performance — online + offline.”

Mars United Commerce offers the size and scale of digital shelf, content, performance and retail media and an existing client based. This is exactly in the sweet spot of what brands want and need, it’s a growing market AND few vendors can supply all of this at scale.

The paucity of the number of vendors who can combine all these capabilities at scale is important. More on this later. 

Publicis appear to have enriched all of their existing capabilities, adding more scale and clients and stamping home its lead internationally in the world of digital commerce and retail media. 

The comparison with Omnicom

Late last year, Omnicom, one of the main advertising holding companies, bought Flywheel from Ascential. What was very interesting at the time of the acquisition was the quote from the Omnicom Chief Executive, John Wren: “Flywheel brings a scaled capability to Omnicom in the fastest-growing part of the industry, which is retail e-commerce and then retail media. That’s a capability we have in part, but these are the leaders.” 

Wren said the company’s first instinct is typically to build a capability instead of buying it, but that Flywheel had accumulated a significant head start.

“When I sent my three top technology guys down to look at [Flywheel], they basically said, ‘You can’t replicate what they’ve done. It will take you as much money and at least five years,’ and that’s if the world sits still, which the world’s not about to do,” he said. 

Writing about the acquisition of Flywheel by Omnicom last year, legendary London media figure, Nick Manning, co-founder of Manning Gottlieb Media (now MG OMD) wrote about the importance of Omnicom’s acquisition. He made some pertinent points:

• “Omnicom rarely makes substantial acquisitions, as it focuses on organic growth. Secondly, Omnicom has created an entirely new entity to sit horizontally within an organisation that has usually been structured vertically, so it can work across the rest of Omnicom.
• “Omnicom has gone for a land grab in the fastest-growing sectors in marketing: digital commerce and retail media. Given the scale and growth of US ecommerce, it’s easy to see why Omnicom wants its share of the market. The deal also gives the company a bridgehead in China, where ecommerce is highly developed.”
• “Digital commerce is much further reaching in that it has implications across the entire marketing spectrum, embracing brand, product, distribution, fulfilment, CRM, search, social, analytics, influencer and media.”

Manning finished up with the following statement: “We are witnessing the full-scale emergence of a new way to drive business and new marketing models, and this will have a profound influence on the marketing services industry and thus the agency world.”

Options for WPP, Dentsu, Havas

The future roles for creative agencies and media agencies are less obvious as the path to purchase changes. It is much easier for companies to take the “flywheel” in-house, aided by specialist practitioners.

So, the question remains: where were the other advertising holding companies such as WPP, Havas and Dentsu? 

How come WPP or Dentsu did not buy Mars, as they have almost nothing like this in their toolkit? This was one of the few companies with a decent digital shelf, data and RM capabilities.”

Clint Armstrong, a former WPP employee who partnered with the Mars United team when working with clients, his comment was that this was an “opportunity to add 1000 Commerce focused individuals already supporting top brands – it’s just left me scratching my head. Assuming WPP was bidding, it may have just come down to fit. Or it may be WPP are focusing on Building vs Buying. Honestly, there are probably a host of reasons and they could be anything”.

With these sorts of valuations, the remaining – often much smaller – independents who have expertise in digital commerce and retail media must surely be rubbing their hands together. There are few larger firms remaining – and if the big holding companies wish to ‘get in on the act’, they will have to buy lots of smaller – often Amazon Advertising only agencies and try and combined them together.