Omnicom grows a bit in Q1 2018 but it’s still feeling the heat in North America

WPP’s biggest rival Omnicom kept its head above water in the first quarter of 2017 with revenues up 1.2 per cent to $3.6bn with organic growth year-on-year of 2.4 per cent. Profits rose 9.2 per cent to $264m.

It did well in most parts of the world but North America, by far its biggest market, continued to struggle with revenue down 7.2 per cent, 0.1 per cent in organic terms. Client cutbacks appear to be hitting much harder in North America.

In an earnings call CEO and now also chairman John Wren (below) outlined some of the problems facing companies like his: “It’s no longer simply about targeting people, being able to reach them. Now you have to reach that consumer, engage them in the type of creative of interest to them and do that at scale. Being able to deliver the right message to the right person in the right context on the right platform is becoming table stakes in our category.”

He also said that in this new era client conflict was becoming less of an era as holding companies pursued new models. “Quite a number of clients really want Omnicom solutions…they are no longer looking for specific brands or specific aspects of our business.”

Which doesn’t augur well for established agency brands (Omnicom’s include BBDO, DDB and TBWA) although Wren surely had in mind new constructs like Unlimited (formed out of DDB) for McDonald’s and data-driven Hearts & Science in media.

As for WPP and its departed CEO Sir Martin Sorrell Wren said: “In many ways I have a great deal of respect for Martin,” adding that he had “competed against him for many years” and that Sorrell did so “very honorably.” Wren implied that he wasn’t in the market for any WPP assets, like research business Kantar, should they become available.

Omnicom is a consistently solid performer, even in difficult circumstances. But the continued reduction in agency earnings in North America remains a worry, as it does for all the holding companies. Clients there may be producing new-style agencies like rabbits out of a hat but they don’t seem to be paying them as much.

The biggest worry for all the holding companies is that this become a worldwide trend.

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