Omnicom’s smoother outlook for the ‘choppy’ creative side

Chris Pash
By Chris Pash | 18 April 2024
Credit: Ian Keefe via Unsplash

The creative side of advertising, having had a rough ride recently, may be heading for a smoother highway.

Omnicom has just come up with revenue numbers which indicate the global advertising group is heading into a profitable year, tracking ahead of many in the industry.

Media is doing well and the business of helping clients flog more goods online, the ecommerce side of things, is solid. 

However, creative, arguably the backbone of the industry, is going through a distinct rough patch.

We knew this from leaking news of redundancies, driven by brands squeezing budgets in an uncertain economic climate where consumers are less than confident.

Omnicom revealed the state of creative, and its prospects for the year ahead, in a briefing to market analysts following the release of March quarter profit numbers.

The company reported better than expected organic revenue growth of 4% in the March quarter and sees full year growth of between 4% and 5%, an improved outlook from earlier in the year.

Omnicom attributed the result to continued strength in advertising and media and precision marketing disciplines.

Steven Cahall, senior analyst, equity research, at Wells Fargo Securities, asked about the creative business during the earnings breifing. 

“Creative is obviously still a big business, and I think it was a little choppy across the industry in 2023,” he said. 

CFO Philip Angelastro said the creative side was “roughly flat” in the March quarter.

“We expect the rest of the year to improve in the creative advertising agencies,” he told analysts.

“It's still core to what we do, and it's really Omnicom's DNA.

“They are certainly very different agencies than they were just a few years back as they continue to adopt new ways of working using current technology … in terms of the content supply chain.

“We're optimistic that they'll be in a growth mode as we go through the rest of the year.” 

CEO John Wren said clients demand more high quality, personalised creative content delivered across more media channels and at faster speeds. 

“We have developed standardised platforms and processes to automate the development of content and deliver it at the right time and place to consumers,” he said.

Omnicom’s consulting firm Credera has grown from 300 employees in three US offices in 2018 to more than 4,000 people across 17 locations worldwide. 

“Although, risks and uncertainty continue to exist in the global economic and geopolitical environment, we remain optimistic about our position in the industry, our strategies and our financial performance,” said Wren .

“I remain confident that our management teams are well prepared to drive operational excellence even as they monitor and adapt to the changes in the macro environment.

AI will also make a difference to creatives.

“The single largest benefit of generative AI as we're using it is it makes it simpler for highly creative people to come up with different executions, different applications of their ideas across many different mediums,” Wren said.

“I guess there's a downside to it. A lot of the things that in the past might have been done manually, and somebody got paid to do that execution work, which was typically pretty boring and repetitive, gets eliminated.

“You're able to come up with better, cleaner, sharper ideas, which can either succeed fast or fail fast. 

“And all that at the end of the day, benefits the client and makes the ROI on a marketing dollar spent greater. And that's where I think the contribution of generative AI is going to come in. 

“And it's been my experience over my career, the more clarity I can bring to a client and explaining what the ROI is on the next dollar of marketing he's going to spend or she's going to spend means that we probably are going to benefit from that in servicing in some fashion.”

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