Omnicom posted its first earnings report following its $13 billion-plus acquisition of rival Interpublic Group in November, but didn’t break out organic revenue figures, a closely watched measure of agency health. Total revenue for Q4 landed at $5.5 billion, up 27.9% versus the year-ago period, with gains partially attributed to a month of factoring within the IPG business. Media and promoting made up about 60% of revenue for the period ended Dec. 31, while precision marketing contributed 10.3% and public relations 9.1%.
Omnicom doesn’t plan on sharing organic growth in its quarterly presentations this yr, CFO Phil Angelastro told analysts on a call discussing the Q4 and full-year results. That could make gauging the performance of what’s now the world’s largest marketing services organization harder. Angelastro estimated Q4 organic revenue would have landed around 4% based on historic measures, excluding planned dispositions and assets held on the market.
Employees who’ve already had to contend with deal of disruption from combining the 2 firms ought to be braced for more change. Omnicom announced it’s doubling its expected cost savings from the deal, from $750 million to $1.5 billion, with $900 million in savings planned for 2026.
Omnicom CEO John Wren identified three core ways the firm will generate savings, with reductions in labor costs making up the lion’s share at $1 billion — a figure larger than the unique cost-savings goal by itself. In addition, real estate consolidation is predicted to save $240 million and synergies stemming from general and administration expenses, IT, procurement and other operational areas will account for $260 million. On the labor front, Omnicom will try to eliminate duplicative roles, streamline agency structures and speed up outsourcing and offshoring efforts.
“Additionally, across every area of our business, we’re evaluating and deploying automation and AI to improve how we service our clients and run our operations,” Wren said.
Omnicom may also exit or sell its businesses in some smaller, nonstrategic markets, which together represent roughly $700 million in annual revenue, according to Wren.
More intense pruning could provide a blow to morale at an organization that has already experienced significant layoffs and where advantages have recently been adjusted, as Adweek previously reported. Asked by an analyst about client sentiment surrounding the deal, Wren claimed business partners have been largely enthusiastic and that optimism is “shared all the way in which down through our worker base about what position Omnicom now’s in …”
“So across the board, it’s much better than I fully expected, because I at all times anticipate that there will likely be some negativity, but we haven’t seen any of that, any particular place within the group,” Wren said.
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