Omnicom Group sees sharp revenue declines in third quarter
Omnicom Group reported an 11.5% decline in third-quarter worldwide revenue to $3.2 billion from $3.6 billion in the same period last year.
The holding company posted an 11.7% decrease in organic revenue in the third quarter.
Omnicom Group Chairman and CEO John Wren said on an earnings call that, "as expected," the negative impacts from COVID-19 "peaked in the third quarter."
By discipline, for the nine months ended Sept. 30, Omnicom reported that advertising services fell 13.2% organically; CRM consumer experience decreased 15.8%; CRM execution and support slipped 15.6%; public relations declined 5.8%; and healthcare increased 5.3%. Wren noted on the call that clients are increasingly looking to Omnicom for digital transformation and e-commerce services.
By region, for the nine months ended Sept. 30, Omnicom reported the U.S. declined 10.3% organically, other North America fell 12.7%, the U.K. decreased 11.1%, other Europe declined 14.4%, Asia Pacific declined 10.2%, Latin America fell 17.5% and the Middle East and Africa dropped 29.7%.
Wren said on the earnings call that the company will be investing more in e-commerce, precision marketing and martech, given the accelerated changes in client needs due to the pandemic. He said that investment will likely include acquisitions.
Since the start of the pandemic, Wren said Omnicom has enacted layoffs, furloughs, company repositioning, real estate reductions and "voluntary pay cuts that will be phased out by the end of the year." He pointed to some wins in the third quarter, including BBDO New York picking up AARP creative duties and Hearts & Sciences winning the U.S. media account of Cox Automotive's Autotrader and Kelley Blue Book brands.
Still, Wren said the fourth quarter remains uncertain with the unpredictability of COVID-19, as well as the result of the U.S. election looming over the period. "There are a lot of unknowns," he said.
In terms of what the holding-company model will be when the pandemic is over, Wren commented that he doesn't "believe we need every single function in New York City in New York City; [some] can be moved to lower-cost areas." He said people's "mental health" remains a concern as being out of the office "puts different people in different situations," but he doesn't anticipate everyone will ever go back to the office five days a week.
On the diversity, equity and inclusion front, Wren said Omnicom is still looking for Tiffany R. Warren's replacement. The senior VP and chief diversity officer announced her decision to leave for Sony Music Group earlier this month. "I want to thank Tiffany for her many contributions," he added on the call.
Wren also said Omnicom expanded its Open 2.0 DE&I team to 25 people from 15 in the third quarter. In July, he announced the company's "Open 2.0" action plan, "to achieve our ultimate goal: systemic equity throughout Omnicom," in tandem with the release of staff diversity data.