Credit: Wolf Zimmermann via Unsplash.jpg
Clients of the advertising world are getting used to dealing with an economy taking unexpected hits from every direction.
And the Middle East conflict, with its confidence sapping effect, is starting, albeit in a small way, to impact advertising budgets, according to holdcos.
The big global advertising groups, in their March quarter results briefings, reported limited direct impact on revenue and profits.
However, the agencies are seeing a small pull back, a hesitation to spend, from clients.
While direct revenue exposure to the Middle East remains small for all five major holding companies — ranging from under 1% at Dentsu to around 3% at Publicis — executives say the conflict means a hesitancy among clients globally.
“After COVID, after the war in Ukraine, after tariffs, after inflation, and now with the Middle East conflict, I would say that our clients … are used to navigating uncertainty,” Arthur Sadoun , CEO of market leader Publicis Groupe, told analysts in a briefing.
"The Middle East is having an indirect impact by furthering and delaying even more of the large transformation CapEx projects," Sadoun said. "Some clients are still, and many clients actually are still freezing their CapEx."
This is hitting Publicis Sapient, the group's technology consulting arm, hardest.
Roughly 10% of Sapient's overall revenue is exposed — both through direct Middle East operations and through its UK business, which services a number of Middle East-based clients. Technology consulting represents 14% of Publicis's total activity, and the segment recorded a slight organic decline in the March quarter.
At Dentsu, the global CEO Takeshi Sano said a mood of hesitancy had started to spread more broadly in April, beyond the immediate conflict zone.
"Oil prices are rising and manufacturers and companies in all sectors are psychologically being affected," Sano said.
"There is a mood of hesitancy. In April, we began to sense such hesitation. It's not that significant, but on a worldwide basis, there seems to be such moves amongst advertisers."
WPP has been the most cautious holdco on the near-term outlook.
CFO Joanne Wilson said the group expected March quarter trends in the Middle East region — where WPP recorded a like-for-like decline of 12.6% — to continue into the second quarter.
"With the ongoing conflict, we expect the Q1 trends in the region to continue through the second quarter," Wilson said.
"When we've seen regional conflicts or challenges in the past, what you tend to find is clients do redirect spend.
“And of course, it will really depends on how prolonged the conflict is. But as I said, it's very much reflected in our guidance and the Middle East at 2% is a fairly immaterial share of our overall net sales for WPP overall."
For Havas, whose Middle East exposure represents 1.9% of net revenue, CFO Xavier Mayer said the impact had been almost negligible in the first two months of the year, with deterioration concentrated in March.
The region's three main markets of Israel, Saudi Arabia and the UAE recorded a combined decline in the range of minus 10% in March.
"The performance of March is not at the level of the previous two months," Mayer said.
However, Havas continues to monitor the situation. “This region remains a mid- to long-term growth opportunity, supported by ongoing expansion of our creative powerhouses.“
Omnicom, which completed its acquisition of Interpublic in late 2025, said the Middle East represents less than 2.5% of revenue.
"As always, we are prioritising the safety of our people in the region and monitoring developments closely so we can adapt quickly to changes that impact our business,” said CEO John Wren.
Despite the uncertainty, all five groups maintained full-year guidance, with executives pointing to the resilience of marketing budgets.
Sadoun at Publicis noted that demand for AI-powered marketing services had continued to grow even as transformation project spending stalled.
"Despite the macro difficulty, despite what we have experienced in the Gulf at the end of the quarter, we have not seen any significant reduction in marketing budget in Q1," Sadoun said.
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.