Advertising Age spotlighted how Omnicom demonstrated extraordinary creativity while presenting its Q1 earnings report—spinning revenue decreases and negative performance into positive predictions. Why, it’s not much different than hyping heat shields and delegating diversity—despite decades of perpetuating exclusivity and systemic racism. Wren should act like a Pioneer of Diversity and publicize quarterly reports on diversity, inclusion and equity figures.
Omnicom Reports Decrease In Organic Revenue With A Positive Outlook For The Year
First-quarter revenue was impacted by negative performance in the U.S, Europe, Latin America, Middle East and Africa
By Brian Bonilla
Omnicom Group reported a decrease in organic revenue of 1.8% in the first quarter of 2021, an improvement from the drop of 9.6% in the fourth quarter of 2020.
The advertising conglomerate’s growth was impacted by negative performance in the U.S, Europe, Latin America, Middle East and Africa. Asia Pacific was the sole region to see an increase in organic revenue of 2.5%.
Despite the negative numbers, John Wren, chairman and CEO of Omnicom, is optimistic about the holding company’s future.
“We’re confident in both our organic growth expectations and EBIT [earnings before interest and taxes] performance for 2021. It is taking some time to turn the corner, and we are now on a clear path to return to growth,” Wren said during an earnings call.
While no specific number projections were given, Omnicom expects to return to positive organic growth in the second quarter and for the full year.
Organic growth is a key financial measure that factors out acquisitions, divestitures and effects of exchange rates.
Despite the decrease in organic growth, Omnicom’s worldwide revenue in the first quarter increased 0.6% to $3.4 billion. Omnicom attributed that growth to a 2.8% boost it received from foreign currency translation.
Omnicom reported first quarter net income of $287.8 million vs. $258.1 million in the year-ago quarter. Diluted net income per share came in at $1.33 vs. $1.19 in the first quarter of 2020.
Omnicom’s earnings report comes after Publicis Groupe released its first-quarter earnings last week, reporting organic growth of 2.8% for the first quarter. Publicis was helped by strong performance in the U.S and Asia, with the U.S growing organically by 5.1%. This is a contrast from Omnicom, which reported a 1.0% decrease in the U.S.
Omnicom, like Publicis, continues to report weakness in its European business. Omnicom said U.K. organic revenue decreased by 6.4% in the first quarter, and other parts of Europe decreased by 3.2% as COVID variants have impacted the region and the vaccination efforts lag behind countries like the U.S.
“Uneven rates of vaccination and recovery around the world could result in earnings drag on sprawling multinational holding companies,” Ad Age’s Judann Pollack wrote in a recent article. “And while certain businesses at the Big 5 agency holding companies have performed well across the board in the pandemic—namely health care, digital and e-commerce—they are still weighed down in major sectors like live events.”
Notable, Omnicom’s CRM experiential discipline reported a 33.2% decrease in organic growth in the first quarter. However, Wren sees an upside on the horizon when live events open up globally especially in China, the Middle East and Western Europe.
“I like the business that we have for it [CRM experiential] long-term,” Wren said. “We are probably more positive than other people, and that might even be an additional boost when things do open up, because a lot of people haven’t had the staying power to continue those businesses during this period of time.”
Omnicom reported first-quarter organic growth for other disciplines as follows: Advertising increased 1.2%, CRM precision marketing increased 7.2%, CRM commerce and brand consulting decreased 4.2%, CRM execution and support decreased 13.3%, public relations decreased 3.5% and health care was flat.
Omnicom continues to look forward, having just announced two acquisitions in the past week. Omnicom Health Group acquired Archbow Consulting, which helps pharmaceutical and biotech companies design, build and optimize product distribution and patient access strategies. Secondly, Omnicom issued a press release saying it had agreed to take a majority stake in technology firm Areteans Technology Solutions, which uses technology, including customer relationship management software from Pegasystems, to help clients acquire and retain customers as well as to build digital marketing and e-commerce capabilities.
Two more major holding companies, Interpublic Group of Cos. and WPP, will be reporting their first-quarter results on April 28.
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