Q3: Omnicom Reveals How It Fares On Programmatic

omnicom-wrenOmnicom Group’s programmatic buying discipline is still in its early days, the agency holding company emphasized during its Q3 2014 earnings call Tuesday.

Programmatic buying constitutes just south of 2% of the company’s overall revenue, which reached $3.75 billion during the quarter, up 7.4% YoY. Most of the growth came from the North America region, which was up 8.9% YoY (compared to the low single-digit growth of other regions).

Omnicom CEO John Wren attributed North America’s increase partially to growth in programmatic buying – as well as other factors like fewer losses and new client wins.

Omnicom, he said, saw a significant uptick in programmatic toward the end of Q3 2013 and throughout Q4 2013 and Wren projected at least double-digit growth for programmatic into Q4 and throughout 2015.

However, he added a caveat, saying it’s still “early days.”

“We’re just developing and refining the skills and the technologies,” he said. “[Omnicom’s programmatic practices] really came on board in the last 12 to 13 months.”

While Omnicom’s data and analytics arm Annalect and its trading desk Accuen have been around for years, changes are afoot, particularly for Annalect, which is attempting to become a platform.

When an analyst asked Wren to compare Annalect to Xaxis, holding company WPP’s marketing technology arm, Wren implied Xaxis was ahead.

“We haven’t gone out yet and looked for non Omnicom clients or gone out and purchased inventory in any meaningful fashion,” he said. “We’re studying what [Xaxis is] doing and when I listen to them, they claim to have a significant business in Europe, much more than ours. I view that as a huge opportunity we have to sort through. There’s no reason to believe we can’t be impactful there as well.”

Both Annalect and Xaxis have invested heavily in data technologies. For instance, Annalect struck a deal with Neustar to use the Aggregate Knowledge data-management platform, whereas Xaxis invested tens of millions to build its own, called Turbine.

As for Accuen, Wren implied the trading desk is still figuring out its programmatic business.

“We have a limited history with Accuen at this point,” he said, emphasizing that the trading desk is new and growing. “We expect it to achieve margin levels over time similar to the rest of our media business. We’re taking a longer-term view of the business itself.”

The Accuen business model, Wren said, is different from the rest of its agency models in that clients pay the price up front, based on specific performance objectives, putting the cost and execution risk entirely on the trading desk.

Still, Wren claimed Omnicom’s programmatic practices drive incremental revenue. When an analyst asked if clients were willing to spend more with the holding company because ad buys are more efficient, Wren said that was correct.

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