With strong performances from its media, precision marketing and PR units,
Omnicom today reported organic revenue growth of 5.2% for both the fourth quarter and full-year 2024.
The full-year growth surpassed the upper end of the firm’s 5% growth guidance for the
year. In Q4 the media and advertising division was up 7.1%, precision marketing gained 9.1% and PR was up 10%, benefiting significantly from added business during the election cycle.
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The
company’s initial guidance for 2025 is for a slowdown in growth to between 3.5% and 4.5%.
When asked about the conservative outlook for this year, Omnicom chairman and CEO John Wren explained on an
earnings call that Donald Trump’s victory is likely to lead to many policy changes impacting business. “We’re still optimistic” about the year ahead, Wren said. And further
talks with clients about potential policy changes by the Republican administration will be factored into possible revisions of the growth outlook.
Fourth quarter revenue totaled $4.3 billion, up 6.4%
on a reported basis. Full-year reported revenue was nearly $15.7 billion, up 6.8%.
“Our strong operational execution gives us confidence for continued strength in 2025," said Wren. "From
this position of strength, we are incredibly well prepared for and excited about the complementary combination of businesses and cultures with our proposed acquisition of Interpublic. Together,
clients and employees will benefit from expanded products to deliver superior creativity, innovation and effectiveness. We will also bring together unparalleled data assets to market, fueling
leading creative, produced at scale, and activated by the world's top-ranked media practice to drive measurable sales. We see significant upside potential through expected revenue and cost synergies
that can drive growth beyond what Omnicom was delivering alone."
During the earnings call Wren provided some details on how an estimated $750 million in synergy savings would be
achieved by combining the two holding companies.He said that approximately 40% of the combined companies' corporate
expenses would be eliminated, including $200 million in compensation savings and $110 million in general administrative expenses.
Another
$25 million in savings will come from centralizing tech and data platforms, Wren said. And $150 million in savings is expected from a procurement review of third-party vendor
contracts. IT and shared services should yield $70 million in savings and the
combined real estate portfolio will be
trimmed by about $55 million.
Once the merger is completed, 85% of the firm’s revenue will be generated in the top-10 markets. The remaining revenue will come from 40 additional markets.
Wren noted that all of IPG’s advertising brands—McCann, FCB and others—will be fully supported in the top-10 markets. In markets
below the top-10, IPG agencies will likely be
reorganized in a structure aligned with the Omnicom Advertising Group, which the company formed last summer to streamline
operations, eliminate duplicative back-office operations and more efficiently allocate
resources in local markets.
Asked how clients have reacted to the proposed merger, Wren replied that there have been “no concerns we haven’t been able to address.” He noted that the company has been working closely with consultants who have been advising clients on the ramifications of the
merger and that the feedback has been “favorable.” Given the combined Omnicom/IPG portfolio of capabilities, Wren said he didn’t expect much in the way of client blowback.
As
reported earlier, shareholders of both companies will vote on the merger at special meetings set for March 18. The regulatory approval process is
also in progress in the U.S. and 17 other countries.
Omnicom was the second holding company to report
full-year 2024 results today, following Publicis Groupe’s announcement earlier
in the day.
This story has been updated.