Omnicom has become the second agency group after Publicis Groupe to upgrade its annual forecast at its Q3 results, boosting sentiment across the wider agency sector.
The agency holding group posted organic revenue growth of 7.5%. In the US, which is its largest market, organic growth was 7.6%.
It grew 13.1% in Asia Pacific, 6% in Europe, 4.4% in Latin America, 7.7% in other North America and 12.2% in the Middle East and Africa.
Following the results, Omnicom upgraded its organic growth forecast from 6.5-7% to 8-8.5% for the full year 2022. Its year-to-date organic growth so far has been 10.3%.
Omnicom’s Q3 revenue was flat year on year on a reported basis at $3.4bn, partly because of foreign exchange differences and the group's exit from Russia earlier this year in response to the war on Ukraine.
Operating profit grew slightly to $546 million, up from $541.6 million in Q3 2021, while the operating margin was 15.9% (Q3 2021: 15.8%).
On a conference call, John Wren, chairman and chief executive of Omnicom Group, said that while the business is confident in its organic growth forecast, it retains a “healthy level of caution” due to factors including the on-going war in Ukraine, the disruption of global supply chains and risks coming from rising interest rates and higher inflation.
He said: “In light of these risks, we are actively taking actions to mitigate the potential negative effects of these macro-factors on our business. I am confident we are well equipped to handle any economic downturn and have the leadership teams in place to minimise the impact on our top and bottom lines.”
Reducing property and office space is a potential area where Omnicom can cut costs in 2023 and 2024, he said.
Wren noted that the business has grown its ecommerce capabilities during Q3 and said Omnicom will continue to invest in this area as well as in CRM and precision marketing, digital transformation and performance media.
Wren said: "Omnicom delivered 7.5% organic revenue growth in the quarter with double-digit organic growth in precision marketing, public relations, and commerce and brand consulting, and solid results across our portfolio broadly. Profitability also remained strong, and our experience with challenging economic environments leaves us confident that we can navigate through current business uncertainty.
"One thing remains certain – the path from marketer to consumer is becoming exceedingly complex, and Omnicom has the talent and capabilities to be the trusted advisor to drive success for our clients."
Asked in a Q&A session about why Omnicom has been performing relatively strongly compared with before the pandemic, Wren noted the agency group's portfolio of capabilities "isn't comparable really" to three and a half or four years ago because it has focused on new areas, such as precision marketing and retail media and disposed of underperforming businesses.
The wider agency sector, not just Omnicom, has benefitted, Wren added, noting "marketplace complexity" made agencies more valuable for clients.
Publicis Groupe reported 10.3% organic growth in Q3 and upgraded its annual forecast to 8.5% earlier this week.