Omnicom has a cozy relationship with generative AI, and it’s not shy about talking up its new bestie.
“We are quickly embracing the technology, as we see massive opportunities to boost the productivity of our people,” CEO John Wren told investors during the company’s earnings report on Tuesday.
The tech will enable creative agency execs to “develop and deploy creative ideas” with greater speed and ease, Wren said. And in the next few years, those gains will translate to an improved ability to demonstrate “the ROI of $1 spent.”
The agency holding company earned $3.6 billion in Q2, with net income up 5% to $366.3 million compared to Q2 2022.
“We continue to bat above average,” Wren said. “We’re a service company, so we’ll succeed with our clients and we’ll suffer with our clients.”
For instance, he said Omnicom’s tech and telecom clients reduced their spending as they went through layoffs, restructurings and reevaluations of their budgets.
Experiential marketing and advertising and media grew by 9.2% and 5.1% YOY, respectively. The advertising and media category comprises 53% of Omnicom’s Q2 revenue, though, while experiential notches a relatively paltry 4.6%.
Although Omnicom met its own revenue expectations, it missed investor estimates. Its stock plummeted by more than 10% Wednesday morning.
Keep your AI on the prize
Strategically speaking, generative AI is top of mind for Omnicom. Collaborations with Microsoft, Google, AWS and Adobe weave generative AI into Omni 3.0, the latest version of Omnicom’s open operating system, which launched in June.
Partnering with Microsoft allowed Omnicom early access to ChatGPT. Omnicom has since built its own custom enterprise version of ChatGPT, Omni Assist, which helps create and plan campaigns.
Through its partnership with Google Marketing Cloud, Omnicom uses Google’s Vertex AI platform and Imagen, an image generation and customization model “with copyright protections built-in” that speeds up content development for ad campaigns. Omnicom also taps into Adobe’s Firefly generative AI tech to create content (that may once have been stock photography or production).
And by pairing its operating system with Amazon Web Services’ generative AI and machine learning services, Omnicom automates aspects of advertising campaigns for its brands, such as writing creative briefs, developing media plans and measuring campaign performance.
What about human ingenuity?
“AI can never replace the inspiration and genius that comes from our people and their creativity,” Wren said.
Not entirely, perhaps. But the company paid out $72.5 million in severance in Q2 to get its costs down and meet revenue expectations.
“Some of it was a swap out of skills,” Wren said. “We’re always going to be looking at the cost base pretty aggressively, especially in the uncertain times we’re in right now.”
There may be fewer knowledge workers at Omnicom in the future. But “they’re always going to be what differentiates companies like ours from everyone else,” Wren said.
