Dive Brief:
- Two of the world's largest ad holding groups, Omnicom and Publicis Groupe, had to dig into their most recent quarterly reports to find bright spots. Omnicom reported its net income was up $2.5 million although revenue was down 2.5%, according to The Wall Street Journal. Publicis is focused on organic growth over other performance metrics, and its Q2 organic revenue growth was up 0.8% while organic revenue declined 0.2% over the entire first half of the year, MediaPost reported.
- Omnicom pointed to uncertainty in Washington, DC for the cautionary note around its U.S. business, citing a lack of clarity on regulation, tax policy and healthcare costs influencing brand's ad spending decisions, the Journal said. It did report a 3.5% organic revenue growth, exceeding analysts' expectations.
- Improving organic growth is Publicis' "number one imperative," according to new CEO Arthur Sadoun during his first earnings call after taking the helm of the company. Publicis' "Power of One" transformation was credited for what was described as encouraging first half results.
Dive Insight:
Beyond the somewhat tepid earnings reports, another indication of the struggles facing the traditional agency space became apparent when Wall Street analysts downgraded the stock of almost every major ad holding group, including Omnicom and Publicis, earlier this month. Along with growing investor pressure and uncertainty stemming from Washington, DC, agencies are also facing down growing competition from management and financial consultancies like Accenture and Deloitte, which are more often entering their marketing business domain.
One response from agency holding companies this year has been to restructure their organizations with an eye on simplicity. In one example, Publicis dropped its Mediavest brand and renamed Mediavest | Spark to Spark Foundry. Among its peers, Publicis also announced one of the more radical moves under new leadership at this year's Cannes Lions advertising festival, when Sadoun forbid all of its agencies from participating in industry awards shows for the next year, with no exceptions.
The announcement came on the heels of the Power of One platform roll out, and the ban was put into place as a cost-saving move, according to an internal memo from Frank Voris, CEO of Publicis Groupe's financial services unit. The company also plans to focus freed time and resources on a new AI platform named "Marcel," which has drawn criticism from both agencies within the company and its competition.
