With Staff Reductions, Asset Sales and Office Consolidations, A Busy Q3 For Omnicom

Omnicom CEO John Wren told investors and analysts today that the third quarter was a busy time for the holding company as it continues to streamline its structure to better meet the changing needs of clients.

Wall Street was pleased with the firm’s third-quarter results, sending Omnicom stock up nearly 7% in mid-morning trading today.

The firm sold off 19 companies, mostly in the CRM space, including Sellbytel, which the firm no longer considers a long-term strategic fit.

It further reduced staff with layoffs, buyouts and a number of senior level retirements totaling 1,400 people, although Wren noted that 500 of those staffers will be replaced as the company realigns to operate more efficiently.

Some of those 500 rehires will likely be part of staffing for at least two recent big wins that will transition to Omnicom by January 2019, including the Ford creative business (BBDO) and the consolidated AT&T-WarnerMedia media account -- which Wren confirmed on the call was “in the process” of being consolidated at Hearts & Science.



The firm also consolidated a number of real-estate leases, co-locating agencies and offices in Atlanta, Dallas, New York and London as part of bid to reduce costs and streamline operations. That’s an ongoing process that will continue in other markets.

The asset disposals and other staff reductions reduced the firm’s total head count by 7,000 during the period, Wren said.

“We’re pleased and on track” to meet financial targets set for full-year 2018, Wren said.

Wren added that he was “cautiously optimistic” that U.S. operations -- which have been sluggish in the organic growth department in recent quarters -- would get a needed boost in 2019, driven in part by the Ford and WarnerMedia wins as well as the fact that many clients have said that they plan to spend more on advertising and marketing going forward.

On the M&A front, the firm still has a couple of divestitures in the pipeline, and more could come as it continues to assess its portfolio. In Q3 it also bought two companies including Credera which the holding company said at the time was its first acquisition in the management and IT consulting space. It also bought a German performance marketing company.

A priority, Wren noted, is bulking up on capabilities that will better enable the firm to create and deliver “personalized messaging at scale” for clients.

That said, he also stressed that big traditional agencies “with strong cultures will continue to exist.”


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