Omnicom CEO Wren: upfront media-buying ‘held back’ as advertisers demand flexibility

Omnicom, the ad agency group that owns media-buying networks OMD and PHD, reported 3.4% organic growth for the second quarter of 2023.

It is slower than the 5.2% growth Omnicom reported in Q1, although year-on-year comparables were more difficult given that the company reported 11.3% growth for the first three months of 2022, when the industry was in pandemic recovery mode.

Advertising & media, which represents around half of the business, and includes Omnicom’s media and creative agencies, grew organically by 5.1% in the quarter.

The strong growth in the APAC region, particularly in China, is notable, but the country’s revenue base is relatively small.

The company’s guidance about how much it will grow this year has not changed (3%-5%), although the company did refer multiple times in its earnings call about clients seeking “flexibility”, given ongoing uncertainty in the ad market right now.

In an earnings call, CEO John Wren insisted that even though advertisers have been looking for flexibility, they are “not walking away from their commitments”.

“PepsiCo even mentioned earlier today in its conference call that it was increasing its spending,” Wren said. “So, I believe we’re in a very good place, a sound place. But as certain clients suffer, we’ll go along for a bit of the ride. But we haven’t lost anything. We’ve been winning business.”

Wren went on to explain that media-buying activity in particular was being “held back” by clients in terms of upfront commitments. This corresponds with Channel 4’s comments last week about the ad market going through an uncertain period, with a lot of “late money” going into TV in particular.

He added: “It’s that preservation of flexibility that has been a constant theme throughout the year. All the negative impacts of Covid-19 for most sophisticated large companies was a pretty easy time, because there was a lot of governmental support throughout the world so people could make commitments. With that gone, as it should be, people have had to adjust their businesses in various ways depending on the industry that you’re in. And the consumer still has money to spend, but you see changes in behaviour.

“You see the travel industry going through the roof because everybody probably was locked up for three years. And you see conservatism in maybe some other spending.”