SBJ/January 28-February 3, 2013/Mareketing and Sponsorship

Omnicom merging GMR Marketing, SportsMark

Editor’s note: This story is revised from the print edition.

Omnicom is merging GMR Marketing and SportsMark to form a single agency with expertise in strategic consulting and hospitality services.

The agency will go by the GMR Marketing name and be headquartered in Milwaukee but have more than 850 full-time employees spread across 20 offices in 10 countries.

SportsMark founder Jan Katzoff will oversee the merger and work out of its San Francisco offices. The new firm’s senior leadership — consisting of executive vice presidents Mike Boykin and Greg Busch, and SportsMark CEO Steve Skubic and President Keith Bruce — will report to GMR CEO Gary Reynolds. A new senior leadership structure is being developed and their titles and responsibilities may change.

The move, which is expected to be announced today, was encouraged by Omnicom’s executives and agreed to late last year by the leaders of GMR and SportsMark, who saw an opportunity to grow internationally by combining GMR’s expertise in strategic consulting, experiential and digital marketing with SportsMark’s strength in global hospitality. It also represented a chance for the agencies to work together to win business rather than compete against each other, as they had begun to do after SportsMark pushed into corporate consulting during the last three years.

“You’re always looking for where one plus one equals three,” Katzoff said. “We felt we were getting to a point on the one plus one equals three by taking GMR’s digital, strategic and mobile practice and putting it alongside SportsMark’s global event management practice. We could have gone on with the agencies competing against each other a little bit and let them bump up against each other, but we decided it made sense to work together.”

Katzoff envisions a combined agency working together in the same way that GMR and SportsMark did with Procter & Gamble in recent years. In 2009, the consumer packaged goods company hired GMR to assist in developing a marketing plan for its new sponsorship of the U.S. Olympic Committee. GMR later suggested P&G hire SportsMark to organize its first P&G Family Home, a hospitality center for athletes’ families during the Vancouver Games.

The two agencies also work with Nissan, Visa and Embratel, but Katzoff expects the number of clients they share to increase as GMR takes the hospitality practice of SportsMark to its existing clients, the same way it did with P&G, and SportsMark takes the corporate consulting expertise of GMR to its existing clients.

But the real business development opportunities will come from winning new business worldwide. Some 60 percent of the combined agency’s business comes from overseas, and Katzoff hopes that SportsMark’s international experience, collected by working on 12 Olympic Games and in 44 different countries, helps GMR as it looks to build upon its international business. The combined agency will open its first office in Rio de Janeiro this April. There are plans to open offices in Asia and Mexico, as well.

Katzoff described a post-merger agency with hubs in London, Brazil, Russia and Milwaukee that could develop work in one market and pass it along to the other in the same way GMR’s Madrid office did when it worked with BBVA on its NBA sponsorship. The Spanish office now collaborates with GMR’s offices in Charlotte and Milwaukee to manage the bank’s activation.

“The more confident we are about a footprint, the more we can say to a client [that] we can deliver services across the board and around the world,” Katzoff said. “If you have a program in Brazil or in Europe or in Asia, you’re going to see the same type of service everywhere. The other benefit is workflow. If we have one office working at maximum capacity on creative, we want to be able to flow that work so that if London is full, we can flow that work out to Milwaukee internally and seamlessly.”

Katzoff said the merger wouldn’t trigger any layoffs. If anything, he said he expects to add staff in the coming months, especially in GMR’s digital and social media practice, which has 100 employees and is expected to grow 25 percent in the next two years.

The primary cost-saving opportunities are on the real estate front, Katzoff said. By combining offices and eliminating leases in markets where both GMR and SportsMark have operations, the combined agency could save money.

Both GMR, which was founded by Gary Reynolds in 1979, and SportsMark, which was founded by Katzoff and Dave Elmore in 1988, were part of Omnicom’s Radiate Group, a sub-holding company for U.S. sports and entertainment marketing agencies. Radiate was designed to encourage Omnicom’s agencies, which range from GMR and SportsMark to Platinum Rye and Go Productions, to work together and share clients, but Radiate took on less importance in recent years as agencies like Pierce, a retail and consumer marketing agency, and Sage, an agency that focused on golf and tennis, were rolled into GMR.

The Radiate Group will cease to exist after the merger. The new GMR Marketing will have its own P&L and report directly into an Omnicom division known as Diversified Agency Services. It’s unclear how Platinum Rye and Go Productions will report into Omnicom. The merger is not expected to affect Omnicom’s other agencies that work in sports consulting like The Marketing Arm.
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