A key factor behind Omnicom’s better than expected results for the June quarter is the performance of its media business.
Overall the global advertising group recorded a 5.2% lift in organic growth in the three months but its media sector did better and represented a great share of its revenue.
The Advertising & Media business grew 7.8% to $US2.046 billion, representing more than half overall revenue at $US3.85 billion.
Omnicom CFO Philip J. Angelastro said the majority of the growth in the advertising media discipline came from the strong performance of the media business.
Creative agencies also grew in the quarter but not at the same pace.
Stephen Hall, an analyst at Wells Fargo, said Omnicom has won a lot of media business over the last 12 to 18 months and the group had defended business successfully.
And some of Omnicom’s peers have struggled on the media side, Hall said.
“I think what we're trying to understand is what’s structural in media buying that's benefiting your strategy or the way you're going to market,” he said
“We sometimes see holding companies go through what seemed like strings of wins and strings of losses, but they're often not always sustainable.
“So really trying to understand what's structural here and if the habits or behaviours of the clients have changed in a way.”
Wren, in a briefing of market analysts, said structure and other elements are at play, including Omni, the end to-end marketing operating system supporting Omnicom agencies.
“In our particular case, I think the key differentiator which, in addition to having excellent people deployed, has been the decade long investment, and the progress that we've made in Omni,” Wren said.
“That has doubled in terms of its capabilities and the information that we gathered to provide insights.”
Omnicom also late last year acquired Flywheel Digital, an ecommerce service enabling brands to sell more goods more efficiently across hundreds of digital marketplaces, such as Amazon, Walmart and Alibaba.
“That is a key differentiator when compared to what the competitor set was, and how we did business three years ago," he said.
Also a key factor is the improvement in measuring the effectiveness of media, coupled with content production tools now automated.
However, Wren emphasised the importance of creativity.
If all players had the same capabilities, the same AI tool, then creativity was the stand out factor.
“Creativity really is at the core of everything that we do,” he said.
“You can take the most sophisticated AI enabling tools, and if you gave them to everybody, you need creative insights and thought in order to differentiate and to beat your competitor.
“The concept of advertising thought from a creative point of view will continue to grow and prosper, even as these tools develop.”
Omnicom expects full year organic growth of 4% to 5%, with a stronger half year ahead.
“Overall, we're pleased with our first half financial results and our progress on key strategic initiatives," Wren told analysts after announcing June quarter results.
“Looking ahead, we expect stronger second half results … in line with our full year organic growth and margin targets.
“I'm confident we can meet these targets, even as we continue to monitor and adapt to changes in the macro environment."
June quarter numbers by business:
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