Dive Brief:
- Omnicom Group saw reported revenue climbed 5.4% year-over-year in Q1 to $3.63 billion, according to an earnings statement.
- Organic growth, a key measure of agency health, was up 4% YoY, bolstered by the ad-holding group’s advertising and precision marketing offerings. Flywheel Digital, an acquisition Omnicom finalized in January, contributed to the strong performance.
- The network raised its full-year outlook to 4% to 5% organic revenue growth, another show of confidence that clients are loosening their purse strings. Omnicom still cautioned that uncertainties, including international hostilities, could impact business moving forward.
Dive Insight:
Omnicom delivered solid Q1 results, offering more evidence that brands are again ramping up spending following a quiet period for marketing activity. Publicis Groupe, a rival, also rode tailwinds in the opening stretch of 2024, with organic revenue increasing 5.3%.
One earnings highlight for Omnicom was Flywheel Digital, an e-commerce firm it bought from Ascential for $835 million last year. The group’s largest acquisition to date, Flywheel Digital aims to shore up a pitch around digital commerce and retail media as marketers prioritize performance know-how. Flywheel Digital, which has about 2,000 employees, sits as a standalone practice within the network and touts a commerce cloud that, combined with Omnicom’s existing solutions, aims to provide clients with a way to track the marketing funnel end-to-end.
Breaking down Omnicom’s earnings by segment, precision marketing saw organic growth of 4.3%. Advertising and media grew 7% while experiential marketing jumped 9.5%. Branding and retail commerce slid by 3.8%, a slump attributed to weakness from branding agencies that are dealing with more project-based work and lapping high gains from the year-ago period. Omnicom does not break out figures for Flywheel Digital but said the unit experienced good growth in Q1.
Another point of discussion was generative artificial intelligence (AI), a technology agencies broadly are betting on as transformative. Competitors WPP and Publicis have pledged to commit hundreds of millions to the sector over the next few years, viewing it as a means to shake up everything from creativity to rote back-of-house work. Omnicom has struck generative AI deals with Getty Images and Google’s Vertex AI to upgrade its internal tech.
AI will affect “every single part of the business” and eliminate some boring, repetitive functions, Omnicom CEO John Wren stated in answer to a question by investors about his views on the technology. The executive also affirmed he sees the human touch as a key differentiator.
“[If] you’re in a competitive industry and the tech is way further than it is today, the competitors simply ask the same questions to reach the same consumers. They’re all going to get the same answers,” said Wren on a call discussing the Q1 results with analysts. “So it’s not going to differentiate anybody. What brings the difference to this is the creative minds that we’re able to attract in Omnicom and apply to those client challenges and objectives.”
