Omnicom grew practically double-digits in 2022, however 2023 outlook is cautious | Promoting

Omnicom closed out 2022 with $14.29 billion in income and natural progress rising 9.4% over 2021. 

The robust outcomes have been led by giant wins in its media enterprise, continued momentum in precision advertising and marketing and powerful progress in its healthcare enterprise, CEO John Wren informed buyers on the This fall and full 12 months 2022 earnings name on Tuesday, Feb. 7. 

The holding firm ended This fall with $3.8 billion in income and natural progress of seven.2% 12 months over 12 months, a efficiency which CEO John Wren described as “stronger than we anticipated.” 

“We weren’t ready to deal with all of the demand there was in December,” he stated. 

Precision advertising and marketing, which encompasses Omnicom’s knowledge, analytics, expertise and commerce companies, grew 13.7% in 2022, fueled by progress in e-commerce and retail media. Wren pressured the significance of e-commerce to purchasers and pegged it as a continued progress space in 2023 and past, because it continues to merge with media budgets. 

“Each media request for a bid for the final a number of years, it’s a must to come and show to that potential shopper the energy of your e-commerce capabilities,” he stated. 

Large media wins together with L’Oreal’s $1 billion U.S. account and Burberry’s international account fueled progress, as Omnicom’s promoting and media division grew 7.3% in 2022. The holding firm expects wins landed in This fall to begin having a constructive affect on its revenues in Q2 and thru the second half of the 12 months. 

Omnicom’s U.S. enterprise grew 8.7% 12 months over 12 months in 2022, whereas the UK grew 10.9% and Asia Pacific grew 14.1%. In This fall, the U.S. grew 5.6%, the UK grew 9.9% and Asia Pacific grew 18.2%, fueled by China’s reopening late final 12 months.

2022 revenue margins have been 14.6%, down barely from 15.4% in 2021, as bills elevated $114.3 million, or 0.9%, to $12.8 million. Omnicom continued to cycle via the disposition of its enterprise in Russia, which incurred a $113 million cost to the corporate. Headcount additionally elevated 12 months over 12 months, contributing to prices.

Omnicom is the second main holding firm to report robust 2022 earnings, after Publicis posted natural income progress of 10% final week. Wren attributed efficiency within the sector because of holding firm companies turning into extra related to purchasers as they take care of elevated complexity within the advertising and marketing ecosystem.  

Nonetheless, Omnicom stays cautious in its outlook for 2023 given ongoing macroeconomic uncertainties and rising rates of interest, forecasting 3% to five% progress.

“We’re not going to be overly optimistic by way of our steering at this level,” chief monetary officer Phil Angelastro stated.  

Shopper pulse

New enterprise is at all times a key precedence for companies, and Wren stated that Omnicom has the correct staff in place to win in giant pitches, citing three key hires made prior to now 12 months: chief advertising and marketing officer Kathleen Saxton, chief shopper officer Andrea Lennon and chief technique officer Alex Hesz. Every have been internet new positions for the holding firm because it seems to establish extra enterprise-level purchasers that it may possibly pitch and develop organically with throughout disciplines. 

“I’m assured within the groups we now have answering these briefs,” he stated,”and our holistic method responding to shopper enterprise wants.”  

Omnicom’s give attention to progress with present purchasers comes as they flip to it for extra strategic work round enterprise transformation – a possibility to extend “share of pockets,” Wren stated.

“We’re not solely answering the transient that the purchasers are essentially placing to us. We’re having a look at their enterprise, their sector and attempting to be useful as a associate to them,” he stated. 

With inflation nonetheless excessive, Omnicom has had “much more success than I’d’ve hoped for” in getting purchasers to pay extra for its companies, or on the very least, considerably extending the size of their contracts. “In getting that in lieu of a value improve, we’re ready so as to add stability to our income base, so we’re benefiting,” Wren stated.

Most shopper sectors proceed to take a position however stay unsure in regards to the 12 months forward. Omnicom expects progress within the healthcare and auto sectors, particularly as provide chains unclog and car makers shift their focus to EVs. It is going to “undergo and really feel somewhat ache” resulting from current mass-layoffs in tech, however the enterprise has “deliberate accordingly,” Wren stated. 

“They will reinvent themselves rapidly, and I’m pleased to have them as purchasers though they’re going through challenges,” he added. 

Again to the AI-enabled workplace

After practically three years of distant and hybrid work, Omnicom is formally asking its workers to return again to the workplace no less than three per week, a transition that shall be accomplished by the tip of the quarter. 

Wren additionally responded optimistically to questions on AI and ChatGPT3, saying that Omnicom will “be embracing as rapidly as we probably can.”

“All the automation we’re enhances capabilities and makes the roles simpler for our greatest and brightest individuals, and it eliminates plenty of the in any other case mundane initiatives or actions that we additionally receives a commission for,” he stated, “We predict it is good for our smartest individuals, and subsequently, it’s going to be good for the work they do on behalf of our purchasers.”