Omnicom is chugging along comfortably so far this year, despite the “increased volatility in the markets” in the last few weeks.
That particular understatement comes courtesy of Omnicom Group CEO John Wren, who also told investors during Tuesday’s earnings report that the first quarter represented a “good start to the year” for the ad agency holdco.
Organic revenue for Q1 increased year-over-year by $121.9 million at a 3.4% growth rate, slightly above the company’s expectations.
The media & advertising and precision marketing arms of the business proved especially solid, with organic growth rates of 7.2% (to $2.04 billion) and 5.8% (to $450 million), respectively.
Overall, total global revenue grew to $3.69 billion for the quarter, up from $3.63 billion this time last year.
At the same time, however, net income dropped slightly from $318.6 million in the first quarter 2024 to $287.7 million now. This decline, said Chief Financial Officer Philip Angelastro, included costs related to the ongoing acquisition of Interpublic Group (IPG).
Going Interpublic
Speaking of which, the IPG acquisition is still progressing nicely, according to Omnicom’s leadership.
In the last five weeks, the two companies have received regulatory approval from five of the 18 jurisdictions where the merger is currently under review. They’ve even received approval in China, which Wren pointed out was an exceptionally difficult hurdle during Omnicom’s failed attempt to merge with Publicis in 2013.
So far (and at the risk of sounding repetitive), the acquisition is still on track to close in the second half of 2025.
But what happens after that? When asked what 2026 will look like in a post OMG-IPG world, Wren said that he has “no fear” that the combined organization will lose any market edge as a direct result of the transaction.
“That’s just nonsense fed by my competitors to the trade rags,” Wren added.
Tariffs, schmariffs
In contrast to the acquisition-related spiciness, Omnicom’s leadership were more orthodox when it came to discussing the potential impact of the United States’ ongoing tariff debacle.
Omnicom’s public relation arm took a slight dip in growth of 5.4%, brought on by what Wren referred to as “certain client delays and reductions from certain government clients.”
When pressed, Wren admitted that it was “something in the US” and possibly FDA-related. However, Angelastro stressed that it was not a large trend that the company was concerned about going forward.
Similarly, branding and retail growth declined 14% for the quarter, Wren said, due to “uncertain market conditions impacting new brand launches and rebranding products.” But this had less to do with tariff-related retail uncertainty than it did a dearth acquisition-related rebrands in recent years, he said, and makes up less than 2% of Omnicom’s total revenue.
So what effect will tariffs have? That’s an open question, said Wren, especially considering the fallout of market declines and trade wars have fallen mostly in Q2.
Meaning, it’s likely that none of us will have a sense of how concerned all these ad revenue-generating brands actually are until later in the quarter – or maybe not even until the ink on this quarter’s numbers are dry by mid-summer.
