Omnicom: Creative Falls for Third Quarter, Media Grows 10%
The creative Advertising segment with BBDO and McCann fell 4–6% for the third consecutive quarter, while Integrated Media grew 10% and brought in $3.2 billion — 53% of the holding's revenue.
Omnicom's advertising division reduced organic revenue (a metric excluding deals and currency effects) by 4–6% year-over-year in the third quarter — the third consecutive quarter of decline. That said, the decline slowed: in the second quarter, the creative segment was losing 7–9%. The data comes from the holding company's press release.
The Advertising segment, which handles brand development and the creation of advertising campaigns, earned $935.4 million, or 15.6% of the holding company's core revenue. It includes the agency networks BBDO, TBWA and McCann.
What caused the decline?
Omnicom's management had previously attributed the creative business's struggles to an internal reorganization following the merger with Interpublic Group (IPG). The companies are reshaping the structure of their agency networks, consolidating divisions and eliminating duplicative functions. In July, Omnicom CFO Phil Angelastro cited these changes as one of the main factors behind the segment's declining figures.
Simply put, the holding is cutting what was duplicated after the merger. Creative revenue is paying for that surgery now. Perhaps the structural economics will win out later.
Media is carrying the holding
The Integrated Media segment grew organically by more than 10% — double-digit growth for the second consecutive quarter. Segment revenue reached $3.2 billion, or 53% of the holding company's core revenue.
Under the media umbrella, Omnicom includes not only ad buying and planning, but also performance marketing, e-commerce, data work, customer relationship management, and automated content creation.
Omnicom CEO John Wren noted that the media business has been growing steadily throughout the year. The quarter also got an extra boost from advertising campaigns and events tied to the FIFA World Cup, as well as activity ahead of the US midterm elections.
Clients: new contracts and renewals
During the quarter, the holding won new contracts from Novo Nordisk, US Bank, L'Oréal and CVS Health. Omnicom also extended its partnership with Mercedes-Benz through 2029 — the contract covers advertising, media placement, social media, events and PR.
Other segments
- Event organization and marketing activations — revenue of $644.3 million, organic growth exceeding 10%. The main driver was events tied to the FIFA World Cup.
- Public relations (PR) — revenue of $678.3 million, organic growth of a few percent.
- Healthcare and pharmaceutical marketing — revenue of $566.6 million, a slight decline in organic performance.
What does this change for the market?
The practical question for competitors and agency clients: will the diverging fortunes of creative and media last. The answer in Omnicom's numbers, so far, is one thing — shares are shifting. Media already accounts for 53% of revenue versus 15.6% for creative, and the gap has been widening for two consecutive quarters. The IPG merger is accelerating this shift: duplicative functions are being cut primarily in agency networks. Advertisers should take note that the holding's investments are flowing into data, performance and content automation.
Original: prnewswire.com
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