Omnicom posted its first earnings report following its $13 billion-plus acquisition of rival Interpublic Group in November, but did not break out organic revenue figures, a closely watched measure of agency health. Total revenue for Q4 landed at $5.5 billion, up 27.9% versus the year-ago period, with gains partially attributed to a month of factoring in the IPG business. Media and advertising made up about 60% of revenue for the period ended Dec. 31, while precision marketing contributed 10.3% and public relations 9.1%.
Omnicom does not plan on sharing organic growth in its quarterly presentations this year, CFO Phil Angelastro told analysts on a call discussing the Q4 and full-year results. That could make gauging the performance of what is now the world’s largest marketing services organization more difficult. Angelastro estimated Q4 organic revenue would have landed around 4% based on historic measures, excluding planned dispositions and assets held for sale.
Employees who have already had to contend with a good deal of disruption from combining the two companies should be braced for more change. Omnicom announced it is doubling its expected cost savings from the deal, from $750 million to $1.5 billion, with $900 million in savings planned for 2026.
Omnicom CEO John Wren identified three core ways the firm will generate savings, with reductions in labor costs making up the lion’s share at $1 billion — a figure larger than the original cost-savings target on its own. In addition, real estate consolidation is expected to save $240 million and synergies stemming from general and administration expenses, IT, procurement and other operational areas will account for $260 million. On the labor front, Omnicom will try to eliminate duplicative roles, streamline agency structures and accelerate outsourcing and offshoring efforts.
“Additionally, across every area of our business, we are evaluating and deploying automation and AI to improve how we service our clients and run our operations,” Wren said.
Omnicom will also exit or sell its businesses in some smaller, nonstrategic markets, which together represent approximately $700 million in annual revenue, according to Wren.
More intense pruning could provide a blow to morale at a company that has already experienced significant layoffs and where benefits have recently been adjusted, as Adweek previously reported. Asked by an analyst about client sentiment surrounding the deal, Wren claimed business partners have been largely enthusiastic and that optimism is “shared all the way down through our employee base about what position Omnicom now is in …”
“So across the board, it’s far better than I fully expected, because I always anticipate that there will be some negativity, but we haven’t seen any of that, any particular place in the group,” Wren said.
