Omnicom mitigated the impacts of the COVID-19 pandemic on its business in part by cutting 6,100 jobs across its network in the second quarter, the company said Tuesday during its earnings call.
Omnicom also froze hiring, eliminated salary increases, implemented voluntary pay cuts across its agencies and participated in government subsidy programs in 35 markets. The holding company shed 1 million square feet of real estate space as it terminated leases across markets.
Overall, cost-cutting measures are expected to save Omnicom $500 million in 2020.
Still, Q2 revenues declined 23%, or $24 million, to $2.8 billion, as clients cut spending. Organic growth was down by double digits in all regions, decreasing roughly 21% in the United States, 24% in the United Kingdom, 29% in Europe, 24% in Latin America and 18.6% in Asia Pacific.
“The quarter posed extraordinary challenges,” CEO John Wren said on the earnings call. “The effect of COVID and related lockdowns were unprecedented.”
Omnicom’s advertising business declined 26.6% in the quarter, driven in part by revenue decreases associated with its programmatic business, where it offers principle-based buying options for clients. Third-party service costs, which Omnicom generates in its events business as well, were $400 million in the quarter.
“If a client is focused on achieving a particular ROI or metric … they choose a bundled product,” said Chief Financial Officer Phil Angelastro. “We deliver that bundled media for a fixed price, and the risk of delivering at that price, for better or worse, we bear.”
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