Omnicom leads organic revenue growth in Q1

Omnicom leads organic revenue growth in Q1

Omnicom's organic revenue growth over the first three months of the year outstripped its rivals WPP, Publicis Groupe, Havas and Interpublic.

The owner of BBDO and DDB led the pack with the strongest organic revenue growth at 4.4%. It reported a 2.5% rise in revenue from $3.5bn in the first quarter of 2016 to $3.6bn in the same period this year.

Publicis Groupe’s organic revenue performance was the worst of the five leading holding companies, falling 1.2%. The group, which owns Saatchi & Saatchi, Leo Burnett and Publicis Worldwide, reported revenue growth of 1.6% year on year to €2.3bn.

For WPP, organic revenue growth was almost flat at 0.2%. On a reported basis, revenue increased 16.9% year on year to £3.6bn. However, this is partly due to the fall in sterling following the vote to leave the European Union in June last year. On a constant currency basis, the owner of Grey, J Walter Thompson and MediaCom reported revenue growth of 3.6%.

WPP was hit by the loss of the AT&T and Volkswagen media accounts in 2016 (which both went to Omnicom) but will start working on Walgreens Boots Alliance later in the year after winning the business in January.  

Sir Martin Sorrell, WPP’s chief executive, said the UK market has been "doing well" despite Brexit but "it’s going to be quite difficult" as the UK’s withdrawal from the EU inches closer.

Havas posted the second-highest year-on-year growth in revenue at 2.6% from €506m to €519m, though organic revenue growth was marginally slower than WPP’s at 0.1%. Ian Whittaker, a media analyst at Liberum, said Havas’ growth was slower than expected. 

Interpublic’s revenue increased slightly (0.7%) from $1.7bn to $1.8bn. However, organic revenue growth was stronger at 2.7%, making it the second-highest performer. The group’s agencies include McCann, MullenLowe and R/GA.

Brian Wieser, senior research analyst for advertising at Pivotal Research Group, calculated that overall global organic growth for the sector stood at 1.7%. He attributed the weak growth to "more uncertainty about how the US government will proceed on a lot of fronts". 

Wieser said stricter contracts from marketers following last year’s US Association of National Advertisers report, which found a lack of transparency among media agencies, as well as consultancies such as Accenture and Deloitte moving into the marketing space, are also having an impact on holding company margins. 

Whittaker added that it has been "a slow start to the year" – something that has been felt "across the board". 

He said: "Several [holding companies] have flagged that the second half of the year will be better, when they expect more business to come through and [from] what they’re hearing from their clients in terms of adspend."

Dentsu Aegis Network is reporting its first-quarter results on 15 May.

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