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Omnicom CEO says tech is salve to cookie-less future as group’s results pip forecasts

The focus on readying the ground for that future came as Omnicom announced a 10.8% year-on-year increase in its operating profit

Omnicom is betting on tech investments to help it outpace its competitors as a cookie-less future looms large for advertisers.

Acknowledging that the pendulum has swung towards prioritizing consumer privacy, chief John Wren said the API tech underpinning his vision for “Omni 2.0” would allow the holding company to “work seamlessly across walled garden environments, as well as the broader ecosystem.”

The focus on readying the ground for that future came as Omnicom announced a 10.8% increase in its operating profit compared to Q1 2020, with the figure coming on the back of a return to organic growth across its advertising and CRM precision marketing divisions.

Betting big on tech to combat the cookie purge

  • The inevitability of a cookie-less future – driven by changes from the largest adtech players including Google and Apple – has led Omnicom and its peers to invest heavily in other solutions. The excision of the third-party cookie from the digital supply chain has, for instance, spurred Publicis to last week invest in a partnership with The Trade Desk.

  • Omnicom’s solution been to spend heavily on first-party solutions and a holistic approach across its agencies.

  • Wren said: “Our data neutral approach, which results in the most diverse compilation of data sets, continues to be rooted in a robust data privacy compliance methodology. We have direct connections to the first-party data of many of our clients, because we are open source and data neutral ... at the same time, we orchestrate data sets from about 100 privacy compliance sources to provide a comprehensive view of the consumer across devices.“

  • Jay Pattisall, principal analyst at Forrester, argued that Omnicom’s investment in Omni – the company’s audience insights and activation platform – should help buffer the areas of the business powered by Omni.

  • “The Portal is built with integrations to DoubleClick, placing it in position to work with Google Floc solutions. So the OMG, PF and Health Omni instances will benefit,” he added.

Revenues return

  • Overall, Omnicom's organic revenues slid 1.8% in Q1. However, this marked a rebound for the holding company after a 9.6% organic year-over-year growth decline in Q4 of 2020.
  • Omnicom’s worldwide revenue grew to $3.4bn in Q1, marking an uptick of 0.6% on the same period in 2020. Much of that revenue was attributed by Wren to beneficial foreign currency fluctuations, particularly in the Asia Pacific.

  • Revenue was split, with 59% from advertising activity and 41% for marketing services.

  • Wren said: “Advertising was up 1.2%; our media businesses achieved positive organic growth for the first time since Q1 of 2020. Our global and national advertising agencies again showed improvement this quarter when compared to the last three quarters.” However, he noted this varied by individual agencies.

  • The holding company has also been accelerating its acquisitions and launches, with both its Omni Health and Omni Earned ID solutions launching over the past quarter; areas Wren said he believed will be beneficial in the mid- to long-term.

Looking ahead

  • Wren said that as its key territories vaccinate their populations, Omnicom is well positioned to see a return to growth after a challenging 2020.

  • “[In] the first quarter organic growth was negative 1.8%, which positions us for a very strong recovery for 2021. Going forward we expect to see positive organic growth.”

  • Pattisall, meanwhile, stated that while Omnicom was at least on pace with its peers in terms of tech investment, it lacked some connectivity to take full advantage of it.

  • “Omnicom is ahead of the curve with developing its technology stack, but it’s moving more slowly to bring creative into the fold. It’s time to think about their advertising discipline as content and activation powered by CRM and martech, rather than a separate line of business.”

  • Compared to the other holding companies, Omnicom has weathered the pandemic better than WPP and Dentsu, though has underperformed relative to both IPG or Publicis.