A PHD-led team from Omnicom Media Group has won Diageo’s global media planning and buying account in virtually all of its key markets around the world.
Diageo, the British drinks giant, has informed agencies of the result despite the escalating global coronavirus pandemic and confirmed the result to Campaign.
It is understood that the review is still ongoing in just a small number of markets.
Isabel Massey, global media director at Diageo, said it had been "a closely contested review".
Dentsu Aegis Network’s Carat was the main incumbent, which faced off Publicis Media and OMG in the final stage.
Interpublic’s IPG Mediabrands and WPP’s Group M were both involved at an earlier stage in the process, which began in September 2019.
Massey said OMG will be "our media agency of record" and PHD will be "our strategic media lead".
Better fusion of media and creative
The appointment "encompasses both planning and buying, and draws on top talent and leadership from across Omnicom Media Group", Massey explained, adding that the need for greater efficiency and a better fusion of media and creative thinking were among Diageo’s priorities during the review.
"PHD presented us with access to standout media talent from across Omnicom Media Group, strategic thinking and expertise around the world, underpinned by Omni, the group’s proprietary software solution, that will complement our own breakthrough marketing effectiveness tool, Marketing Catalyst."
Massey praised Carat and its "brilliant teams" for "their partnership, specialist knowledge and the passion they have brought to our business".
She added: "I was impressed by the respective strengths of all the media agencies involved in the process and am pleased to see the industry is buoyant and innovative."
Diageo, the owner of Guinness, Johnnie Walker, Smirnoff and Tanqueray, expects the transition from Carat to PHD and Omnicom Media Group to happen by around July, in time for the start of its new financial year – even though the impact of the coronavirus is uncertain.
The drinks company is one of the world’s biggest advertisers and is thought to spend upwards of £500m a year on paid media.
The FTSE-100 company’s annual report shows that its total marketing outlay was more than £2bn ($2.6bn) last year and it has a reputation for investing in its brands, rather than cost-cutting.
"Our approach to this review was guided by our belief that world-class marketing needs world-class media," Massey said, explaining the decision to appoint OMG and PHD.
"We were looking for bold expert media leadership to help us to navigate the fast-evolving and complex media landscape in service of the growth of our brands.
"Media plans are no longer about simply reach and optimising frequency, they are about making business decisions which balance short and long-term growth, combined with our business-wide approach to responsible marketing driven through the Diageo marketing code" – a reference to "responsible" drinking.
Efficiency and effectiveness
Massey went on: "At Diageo, we are evolving the way we invest in our brands, but our starting point is always creating world-class brand experiences for consumers. In our media plans, we focus on every channel having a clear and purposeful role to play, made even smarter thanks to data and technology.
"The developments in our industry mean we can now be more ambitious in the way we combine media and creative, scale ideas faster than ever before, whilst being even more thoughtful in the way we connect with people.
"This means combining creative magic with rigorous marketing effectiveness and requires great team-work and inspired use of the right media platforms and technology."
Ivan Menezes, global chief executive of Diageo, spoke last year about the importance of "everyday efficiency".
Massey said: "Our focus on efficiency and effectiveness means we have been able to increase investment in our brands over the past three years, with the goal of fuelling long-term sustainable growth.
"Our marketing effectiveness tool Marketing Catalyst is leveraging data and analytics with increasing sophistication to increase the transparency of our investment and allow us to ensure every pound we spend is working as hard as possible.
"Over the last three years, we’ve upweighted our media spend by £200m, and if you add the efficiency we’ve driven, that would be worth another £100m."
The importance of creative and media working together
Diageo uses many ad agencies, including Anomaly, BBDO, Mother, 72andSunny and VMLY&R, for its creative work around the world and Massey signalled that closer co-operation with media is vital.
"Core to our review has been the drive to combine creative and media brilliantly, maximise our marketing effectiveness tool, and give operational excellence equal importance as planning and buying excellence," Massey said.
"As we move into this new chapter for Diageo’s approach to media, we’ll be focusing on creating work that drives growth for Diageo, moves the industry forward and has the power to inspire new, diverse talent to join our industry."
MediaSense supported Diageo on the media review, which has largely completed on schedule, even though the drinks giant warned on profits at the end of February over the impact of coronavirus in Asia.
Diageo’s biggest market is North America, which generates 35% of its net sales. Europe represents 23%, Asia-Pacific 21%, Africa 12% and Latin America and the Caribbean 9%.
A spokesman for Dentsu Aegis Network said: "We are extremely proud of our long-standing relationship with Diageo and the business outcomes that our partnership has driven over the last two decades. We wish Diageo continued success with their new agency arrangements."