Omnicom reported better than expected revenue for the June quarter but said the road ahead was uncertain due to the pandemic.
Top line revenue for the second quarter was better than expected at $US3.57 billion, 27.5% higher than the same quarter last year.
Organic growth was 24.4% or $US682 million.
The numbers are a significant increase compared to the same three months of 2020, when the fallout from the pandemic dragged revenue down by 23% or $US855 million.
CEO John Wren is optimistic about future prospects but remains vigilant because of the pandemic.
"We expect our return to growth will continue in the second half," he says.
"However, as long as COVID-19 remains a public health threat, some uncertainty regarding economic conditions will continue which could impact our clients’ spending plans and the performance of our businesses may vary by geography and discipline," he says.
He says Omnicom experienced a significant increase in spend from existing clients as the effects of the pandemic subsided, plus the benefit from strong new business wins.
Wren says he expects a focus on pursuing acquisitions in the areas of precision marketing, tech and digital transformation, commerce, media and healthcare.
The outlook was for positive but slower growth.
“Looking forward, we expect to continue to see positive organic growth as client spend increases, albeit at a slower pace than we experienced in Q2,” Wren told a briefing of market analysts.
In the US, the market reacted with Omnicom’s shares falling more than 4% to $73.06.
In the regions, the Asia Pacific business was up by 27.9% with all major countries on double digit growth.
Agencies in Australia, Greater China, India and New Zealand were “leading the way”.
Wren says many of the company’s agencies are hiring staff to service an increasing client spend and the new business wins.
“We have seen some pressure on our staff costs, particularly in the US as the labor markets remain tight,” he says.
“We are also beginning to see a return of travel and certain other addressable spend as government restrictions have eased.
“Based on our use of technology during the pandemic, we are developing practices particularly with respect to travel that should allow us to continue to retain some of the benefits we achieved in addressable spend.
“We expect that the increase in addressable spend in the second half of the year will be mitigated in part by the benefits we will achieve from a hybrid and agile workforce.”
However, Omnicom is focused on a return to the office.
“Continuing to focus on our people, we are pleased many of them have returned to the office as government restrictions are reduced or eliminated,” says Wren.
“We are encouraging our people to begin to make plans to return to offices as conditions improve in their local markets.
“Overall, we believe a return to an office-centric culture will enable us to invent, collaborate and win together most effectively. In turn, it will allow us to best serve our clients.
“The return to office will be grounded in safety and flexibility and local leaders will determine what combination of office and remote work is most effective for their teams. I personally look forward to re-engaging in person with our people and our clients over the coming weeks and months.”
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 email@example.com