Omnicom’s organic growth up by 11.9% in Q1

Demand for CRM, data and performance media have the company optimistic, despite several global risk factors.
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Omnicom is well on the way towards pandemic recovery as increases in revenue across services offset the impacts of ending its operations in Russia.

Reported growth was actually down by 0.5% year-over-year, which the company attributed to the impacts of exchange rates, a decrease in acquisition revenue and a 9.9% dip thanks to dispositions, primarily in the U.S., in the second quarter of 2021.

Organic growth – which excludes the impacts of these factors – was up 11.9%, with growth across each of the company’s business segments.

The Advertising & Media segment, which makes up more than half of Omnicom’s revenue, had 9.1% organic growth. The Experiential segment had a massive 68% organic growth as pandemic restrictions eased and demand for in-person events rose; however, Omnicom CFO Phil Angelastro said in a call with investors that while he expects growth to continue, it may be “choppy” as clients adjust to a post-COVID environment.

The Precision Marketing segment grew by 20.3%, and is now the company’s third-largest contributor to revenue. Angelastro said demand is strong for services related to digital transformation, CRM, data, analytics and activation. Looking forward, company CEO John Wren said the company plans to continue investments in these “high-growth” areas, as well as ecommerce, performance media and health.

Regionally, Omnicom’s “Other North America” segment – which includes its Canadian agencies – had 9.6% organic growth.

While the company’s overall expenses have dropped year-over-year – primarily thanks to cutting back on third-party service costs – this quarter did include a $113 million USD charge related to ending its operations in Russia as a response to the war in Ukraine.

Wren said the company is cautiously optimistic, offering guidance of 6% to 6.5% organic growth for the full year, though it is planning for the impacts of a number of factors, including the war in Ukraine, the pandemic, the disruption of supply chains and the economic risks posed by higher inflation and oil prices.