Omnicom president and chief executive John Wren has attributed the high number of advertiser media reviews to an increasingly tech-driven and complex marketplace, characterised by clients “re-evaluating how things have been done in the past”.
The Omnicom boss was reporting the group’s second quarter results for 2015, which saw it post global revenue of $3.8bn in the second quarter, down 1.7% compared to Q2 last year, due partly to foreign currency fluctuations.
“Despite all the noise in the marketplace, I do think it’s been very consistent how clients are re-evaluating how things have been done in the past and they’re re-evaluating the teams they’re doing them with,” Wren said.
“I think it has more to do with the complexity of the marketplace and it turns out to be a process ultimately that should be beneficial to us on my side of the table, but probably beneficial to the clients because they can challenge media folk to say, ‘Listen, we’ve been doing it this way until now, should we be changing the way we’re planning and executing?’
“We’ve seen clients rethinking their own behaviour.”
Wren’s comments were made during a call with analysts, when the group reported the better-than-expected results.
He explained that Omnicom had decided to not participate in reviews for advertisers including Coca-Cola, L’Oreal and Citibank, adding that technology such as programmatic had contributed to review activity.
“Technology has radically changed media planning and buying,” he said. “The rise of digital, data and analytics has given marketers the ability to more precisely understand how consumers are using media.
“We’re about halfway through the reviews that have been called and I think they will all be decided by October. It will be very interesting to see who the net winners are in this round.
Omnicom has recently added $1.4bn-plus in annual billings for the first six months of the year from new business from the likes of SC Johnson and Bacardi.
“I’m very confident that with the amount of revenue already won and the few losses that we’ve suffered, we’re well ahead of the game, and looking out there, there should be on the upside, opportunities for us,” Wren said.
He also insisted that the group was not pandering to calls from clients for over-zealous terms.
“Except for one client that we consciously decided not to pitch for because of the terms they wanted, we’ve not seen people racing forward and discounting things,” he said. “Clients are fairly sophisticated and they know at the end of the day that they will get what they pay for.”
Wren was quick to downplay the cost of pitches to the group, saying that there were “very senior people” working on them who were “probably working a bit harder than before the pitches”.
In the second quarter of 2015, Omnicom achieved organic growth of 3.9% in European markets, offset by flat growth in France and decline in the Netherlands; while countries including Turkey and Sweden achieved above average growth for the group, and APAC grew 7.6%, with strong performances in Australia, China and Singapore. – M&M Global