Omnicom Fails to Meet Second-Quarter Revenue Goals

Omnicom failed to meet its second-quarter revenue goals, but CEO John Wren said the holding company had "a good quarter" in an earnings call today. Omnicom's worldwide revenue increased 1.8 percent year over year in the second quarter of 2018 to $3.9 billion. "Looking at our second quarter organic growth across disciplines, we saw positive results in almost every area of our portfolio," Wren said, with the exception of CRM, execution and support, which was down 4.4 percent for the quarter. Wren explained that discipline was one that was evaluated as "part of our ongoing evaluation of our portfolio of companies to ensure they align with our long-term strategies," leading to the sale of Sellbytel Group to global business process outsourcer Webhelp Group, which is expected to close in the third quarter. He added that the holding company is "pursuing several acquisition opportunities, particularly in the areas as data, analytics, digital transformation and precision marketing." Omnicom continued to struggle in North America, with organic growth down 0.9 percent, including a decrease of about 0.5 percent in the U.S. Wren noted that CRM, consumer experience, healthcare and PR all did well in the region, with combined growth of about 4 percent. He explained those gains were "weighed down" by client losses in North America advertising and media, as well as a decline in CRM, execution and support. In the U.K., organic growth was down just over 2 percent, which Wren attributed to CRM declines offsetting strong performances from advertising, media and PR, with healthcare flat. Omnicom reported positive organic growth for the Euro and non-Euro region (over 11 percent), Asia-Pacific (8.5 percent) and Latin America (2.5 percent), while its smallest region, the Middle East and Africa, saw a decline of 8 percent for the quarter, with a positive performance in Africa offset by declines in the Middle East. "A key topic that is keeping many of the world’s top marketers up at night is how to manage disruption in their businesses—whether it’s threats from new competitors or keeping pace with changing consumer behaviors," Wren said. "Our agencies are working with them to reinvent their marketing and communications strategies with an ever-increasing focus on placing our client’s customer at the center. For this reason, Omnicom has for many years been investing in data, analytics and precision marketing." However, he added, such data and analytics should remain in service to creativity, a message which was reiterated by clients at the Cannes Lions International Festival of Creativity. "That is why Omnicom is staying true to our roots of recruiting and developing the best creative minds in our industry and respecting the individual cultures of our agencies," Wren said. Wren took time to celebrate recent new wins, including BBDO being named creative agency partner for Dunkin' Donuts, GSD&M winning creative agency of record duties for Pizza Hut and PHD being named media agency of record for HSBC, while also touting the network's successful performance at Cannes. He also touted Omnicom's people-based Omni platform, which is "designed to identify and define personalized consumer experiences at scale, in order to drive superior business outcomes for clients." Wren said Omnicom remained "cautiously optimistic" that its performance would improve in the second half of the year and that the network would meet its performance goals for the year.