Brief

Omnicom's Accuen stalls as advertisers seek more transparent fees

Dive Brief:

  • Omnicom Group bested its internal Q1 revenue expectations, but the Wall Street Journal reports its executives are citing an uncertain political and economic climate for a watchful outlook.
  • “We remain cautious as numerous geopolitical and macroeconomic events remain unresolved. In the U.S., it is still unclear how legislation in several major areas, including the budget, tax reform, infrastructure spending and health care, could impact the economy," said Omnicom CEO John Wren in the Journal’s report. "And the U.S. relationship with several key international trading partners is also being tested by the new administration,”
  • During the Q1 earnings call, Wren called attention to flat growth for Accuen because of a shift in programmatic buying to disclosed purchases rather than non-disclosed where agencies buy and resell inventory to clients with a fee attached to each media buy, per AdExchanger.

Dive Insight:

Right now agency relationships with brands continue to be in a state of flux, and as Omnicom’s execs pointed out in the Q1 earnings call there is a huge amount of uncertainty globally between the election of Donald Trump in the U.S., the U.K. Brexit vote and upcoming elections in France that will have a direct impact on the future of the E.U. So, even with a better than expected first quarter, Omnicom is tamping expectations going forward.

Programmatic ad buying is at an interesting crossroads. It’s convenient, but the recent woes around brand safety and offensive content on YouTube are contributing to a situation where advertisers are beginning to question the entire digital advertising landscape. Brands are looking for more control in where their ads are placed as well as greater transparency into what they are paying for. The latter is one reason for Accuen's flat growth rate, per Omnicom. 

The reasoning for Accuen’s lack of growth could have been foreshadowed by the ANA last year when it voted for “transparency” as the marketing word of the year for 2016. The industry has been rocked by scandals of agencies getting rebates on media buys that don’t get passed along to marketers, and publishers are concerned that too much of the dollars spent on their inventory goes to murky middle players in the process.

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