CV-19 Slashes 23% From Omnicom’s Bottom Line In The Second Quarter Of 2020

CV-19 Slashes 23% From Omnicom’s Bottom Line In The Second Quarter Of 2020
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The world’s second biggest media company, the Omnicom Group, has announced global revenue declined 23 per cent, or $US24 million, to $US2.8 billion, in the second quarter of 2020.

Organic growth was down by double digits in all regions, the company has revealed due to the global pandemic.

The US was down 21 per cent, the UK down 24 per cent, Europe down 29 per cent and Latin America down 18.6 per cent.

The Asia Pacific region – where Australia plays – was down 18.6 per cent.

The New York-headquarted company – that includes such agencies as BBDO, DDB, TBWA and OMD  – also revealed that cost-cutting measures are expected to save the business $US500 million in 2020.

Omnicom operates in some 100 countries with a global head count of 77,000. However, it shed some 6100 jobs due to the CV-19 downturn.

The company also froze hiring, eliminated salary increases, implemented voluntary pay cuts across its agencies and participated in government subsidy programs in 35 of the markets it operates in. The company also shed one-million square feet of real estate space as it terminated leases across markets.

However, 2020 hasn’t been without some significant wins, with Omnicom becoming Air France’s global agency of record and winning cleaning product producer Clorox’s media in the US.

In a statement, Omnicom CEO John Wren said: “The quarter posed extraordinary challenges. The effect of COVID and related lockdowns were unprecedented.”

However, Wren added that he believed the company had seen the worst from the fallout from CV-19.

“We think the worst is behind us, with Q2 being the worst point for year-over-year revenue declines,” Wren said.

Omincom’s CFO Phil Angelastro added: “Will governments open up to the point where large gatherings will be back?

“We just don’t know, and we’re not anticipating in the second half that there’s going to be a meaningful rebound.

“We will continue to actively manage our costs to ensure they align with our revenues. We want and expect our people to be realistic about their forecasts,” Angelastro said.

The company’s advertising business declined 26.6 per cent in the quarter, driven in part by revenue decreases associated with its programmatic business. Third-party service costs, which Omnicom generates in its events business as well, were $400 million in the quarter.

Revenues also declined in all of Omnicom’s agencies besides healthcare, which grew 3.2 per cent in the second quarter of 2020.

 

 

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