Dive Brief:
- Omnicom has acquired Flywheel Digital, an e-commerce firm, from Ascential for $835 million, according to a news release. The deal is expected to close in Q1 2024, subject to shareholder and regulatory approvals.
- Launched in 2014, Flywheel provides solutions that help thousands of brands sell goods on digital platforms such as Amazon, Walmart and Alibaba. Services span commerce operations, media execution and market intelligence, all supported by the Flywheel Commerce Cloud.
- Flywheel, which has about 2,000 employees, will sit as a practice area inside Omnicom and be led by Doug Painter, formerly Ascential’s CEO. Omnicom looks to link Flywheel’s troves of transaction data with its own audience and behavioral insights as retail media gains prominence.
Dive Insight:
Omnicom is further rounding out its performance marketing and retail media capabilities with the purchase of Flywheel, a firm that manages a high volume of product sales and billions of dollars worth of ad spend annually for top CPG marketers including Procter & Gamble, Unilever and Clorox. The acquisition follows Ascential’s recent move to reposition Flywheel as its leading digital brand. Last week, the company integrated 11 businesses that previously sat under the Ascential Digital Commerce unit into Flywheel.
The appetite among large ad-holding groups for performance media and e-commerce firms spiked earlier in the pandemic when consumers began shopping online in higher numbers and with greater frequency. Retail media networks that leverage first-party shopper data to help CPG marketers better target their ads have also become popular with the pending deprecation of third-party cookies. But macroeconomic pressures, including soaring interest rates, have cooled M&A activity for the agency category of late, making the size and scope of the Flywheel deal noteworthy.
Omnicom CEO John Wren cited research that forecasts global e-commerce sales will increase by 50% to reach $7 trillion dollars over the next two years, in a press statement around the news. Such numbers point to the potential opportunity for agency growth that Omnicom sees. Flywheel generated approximately $300 million in revenue for the 12 months ended in June 2023, according to an investor presentation shared by Omnicom.
“The acquisition of Flywheel significantly broadens our reach and influence in the rapidly expanding digital commerce and retail media sectors, two of the fastest-growing parts of the industry,” said Wren. “Together, we will seamlessly integrate our offerings across retail and brand media, digital and in-store commerce, and CRM, ultimately delivering superior results for our clients.”
Omnicom aims to wed Flywheel’s heaps of transactional insights derived from relationships with over 4,500 brands to its own bets on first-party data and commerce know-how. The agency network last fall launched a connected-commerce consulting and online retail services offering called Transact.
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.
