Gurjit Degun
Jul 29, 2020

Omnicom Q2 organic revenue plunges 23%

The holding company turns in performance significantly worse than that of Publicis Groupe, as operating profit plummets 89% to $62.5 million.

Omnicom CEO John Wren
Omnicom CEO John Wren

Omnicom's global organic revenue plummeted 23% in the second quarter of the year, showing the major impact that the coronavirus pandemic has had on the business.

The company, which owns the DDB and BBDO ad networks, reported revenue of $2.8 billion for the three months to 30 June, down 25% year-on-year on a reported basis.

Operating profit plunged 89% to $62.5 million, compared with $573.7 million in the same period last year.

The world's second-biggest agency group ran up some one-off costs, including $150 million in severance costs, as it cut 6,100 jobs.

The group previously said it employed about 70,000 people at the end of 2019.

Omnicom's advertising business reported a 27% fall in organic revenue; CRM consumer experience showed a 26% decline; CRM execution and support decreased 28%; and PR fell by 13.9%.

Much like its competitors, Omnicom reported an uplift in its healthcare division, by 3.2%.

Omnicom said the reduction in revenue is expected to continue for the rest of the year.

The report said: "While we have a diversified portfolio of service offerings, clients and geographies, demand for our services can be expected to decline as marketers reduce expenditures in the short term due to the uncertain impact of the pandemic on the global economy.

"During the second quarter of 2020, we realigned our agencies' cost structures, which included severance actions and furloughs to reduce the workforce, right-of-use asset impairments and other real estate costs, a net loss on the disposition of certain subsidiaries and other charges.

"These actions were taken to tailor their services and capabilities to changes in client demand."

Omnicom's 23% organic revenue decline was significantly worse than French rival Publicis Groupe, which reported a 13% drop in the second quarter.

Ian Whittaker, a long-time media analyst in London, said the results were "much worse than Publicis' surprise positive news last week".

He noted Omnicom's performance was particularly weak in North America and Asia-Pacific compared with the French group.

"It suggests the performance of the big global agency groups may be more varied than expected," Whittaker said.

Analysts at Barclays said the results were a "surprise on the downside" and the outlook for the rest of 2020 was "also surprisingly downbeat".

Campaign UK

Related Articles

Just Published

6 hours ago

Not just hype: Winning consumers with live commerce

With three in five people expecting to interact with brands online today, live commerce is an ideal platform for consumers to enjoy the content, socialise, and make purchases simultaneously.

6 hours ago

How dating apps master the art of marketing matchmaking

We explore how dating apps set themselves apart in a crowded space and manage to beat Cupid at his own game.

6 hours ago

Dentsu, Hakuhodo raided as part of Tokyo 2020 ...

The ever-widening graft case of last year's Tokyo Olympics has Dentsu, ADK and Hakuhodo's offices being searched on grounds of rigging bids for test events.