Omnicom is staying flexible with costs as inflation rises and talk of a recession gets louder.
CEO John Wren told a briefing of analysts: “ ... unlike some of the other recessions … this one has been a little bit slower rolling.
“We've all been anticipating it, especially as central banks raise interest rates and create different macro issues, and God knows what's going to happen in the war in Ukraine, and people have w been working through their supply chain issues.
“We've been able to adapt to all of that, and we'll continue to adapt.”
Omnicom posted organic growth of 7.5% in the September quarter confident of the road ahead despite uncertain economic conditions ahead.
The company, during a call with analysts, increased its organic growth forecast to 8% to 8.5% for the full year, up from previous guidance of 6.5% to 7%.
Omnicom says it is confident, with its experience with challenging economic environments, that it can navigate through current business uncertainty.
CFO Phil Angelastro: “We've been through this before.
“Certainly, it's a reality of what everybody is dealing with today, ourselves and our agencies along with our clients.
“And frankly ... we continue to look for efficiencies in the cost structure. It's flexible.
“We've been pursuing opportunities for offshoring outsourcing automation, … and we've got a number of open positions and access to a flexible workforce that we could fill those positions if we need to with contractors ... rather than with permanent people in some cases.”
Angelastro says there's no one silver bullet to deal with inflation.
“But it's a combination of things that we really need to do at the detailed agency-by-agency level.
“But we're certainly driving a number of initiatives to make sure that we take advantage of whatever opportunities we have to find efficiencies and new ways of working. Coming out of COVID is certainly helpful.”
However, in the first nine months of the year consumers and clients have continued to spend.
“I think we're talking about what happens if and when the environment changes ... hard to gauge how much it's going to change by,” Angelastro says.
“But the environment certainly has been a positive in the context of the types of services that we provide.”
But as costs rise, there’s pressure on the fees charged to clients .
John Wren: “We have been able to get improved pricing on some clients, but it's certainly not an assumption that we make because that same inflation cost causes inconveniences for our clients.
“And the end of the day, we're partners. So the ones that prosper, we prosper. The ones that suffer, we suffer with because we have long-term relationships.
“We're trying wherever it's sensible to get paid fairly for the services we provide. And our clients are very much aware of the fact that we all face similar problems and have been doing a level best client-by-client to address ourselves and adjust appropriately.”
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