12 February, 2020

Strong Advertising Results See Omnicom Record 2.8% Organic Growth For 2019

By Edward Pollitt

Omnicom recorded 2.8 per cent organic growth in 2019, led by a strong performance from its advertising business, which grew 4.5 per cent during the year.

The company’s fourth-quarter financial results beat Wall Street estimates, recording earnings of $US1.89 per share, which was up almost seven per cent compared to the same period in the year prior.

Earnings per share were 3.9 per cent higher than the previous year.

“In the face of a dynamic, yet challenging environment, I’m very pleased that our strategies, talent and execution have allowed us to consistently deliver solid financial results,” said company chairman and CEO John Wren [feature image] on an earnings call.

The operating profit for the 12 months ended 31 December decreased $US11.2 million (0.5 per cent), while the operating margin increased 14.2 per cent in the same period.

Following the announcement, Omnicom’s shares rose nearly three per cent.

Although the advertising business – which accounted for 56.5 per cent of full year revenue – had a strong 2019, not every discipline performed so well.

Organic growth for the CRM Consumer Experience was up 1.6 per cent and Healthcare increased by 9.5 per cent, while CRM Execution & Support decreased 3.2 per cent and Public Relations decreased 2.0 per cent.

Regionally, the Asia-Pacific segment of the business reported 4.5 per cent organic growth for the fourth quarter of 2019.

Although the results did not disclose official local figures, Wren said: “China and Australia had good results in the quarter”.

He also added Omnicom’s Australian agencies had a “solid performance”, along with South Korea and Thailand.

turning to tech

With the strong performance of the advertising and healthcare businesses, Forrester principal analyst Jay Pattisall suggested the company’s continued investment in technology and data analytics could help the company in the long term.

In particular, with the ‘Omni’ precision marketing tool now available globally and break ad format tool ‘Q’ having recently been launched, Wren said clients will soon see the benefits.

“The utilization of Omni and especially Q, which I mentioned in my remarks, will benefit PR business in some of their assignments,” he said.

“Omni’s open platform allows us to continually evolve and expand its capabilities to serve the specific needs of our agencies and clients.

“As an example, our pioneering cultural consultancy, sparks & honey recently launched Q, a first of its kind SaaS platform, that combines human and AI-powered intelligence, to help organizations predict change before it disrupts their business. The capabilities of Q are fully embedded within Omni.”

Life after cookies

Wren also fielded a question on Google’s recent decision to block third-party cookies on Chrome, citing Omni as a potential solution.

“We’ve been expecting this for some time now,” he said about the decision.

“It’s not new news to us. It will make targeting a little bit more challenging than it was in the past. Then it certainly will make Google stronger.

“But in anticipation of it, that’s why we work so diligently on the creation of Omni and the enhancements that we made to it. In the future, it’s not just going to be the data, it also has a lot to do with the execution, which you actually do with that data and how you process it.

“Clients, other people have other sources, which we can get access to from first-party data, which can be used to accomplish many of the objectives that were made a little bit easier with cookies.”

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