Publicis, Omnicom, IPG post strong gains as agencies reap rewards of pandemic rebound

Dive Brief:

Publicis Groupe, Omnicom Group and Interpublic Group of Cos. (IPG) posted spectacular gains of their most up-to-date monetary outcomes, the most recent signal {that a} pandemic rebound is beginning to bolster the embattled company enterprise.
Publicis noticed natural development, a key measure of company well being, up 17.1% within the second quarter, a pointy turnaround in comparison with the 13% drop recorded over the year-ago interval when the pandemic first shut down the economic system. IPG reported natural web income rose 19.8% in Q2 versus a 9.9% decline over the identical interval in 2020. Omnicom equally had a strong displaying, with natural development of 24.4% in Q2.
Publicis and IPG raised their full-year forecasts following the earnings, whereas Omnicom executives indicated the group may have interaction in additional dealmaking within the second half. Though some uncertainties linger with the unfold of the COVID-19 delta variant, agencies could possibly be higher girded for disruptions shifting ahead.

Dive Insight:
A batch of Q2 earnings final week confirmed agencies on the mend following a brutal pandemic interval that led to mass advertiser pullbacks and a sluggish marketplace for new enterprise. Publicis chief Arthur Sadoun mentioned the group — bolstered by a strong U.S. enterprise — truly scored higher outcomes on key efficiency indicators in 2021’s first half versus the identical interval in 2019, properly earlier than COVID-19 rocked the class. IPG provided an identical evaluation, suggesting agencies have the prospect to recuperate sharp losses from the previous 12 months.
“Our outcomes this quarter evaluate favorably not solely to the identical interval final 12 months — which whereas the steepest lower of the recession was properly forward of our peer group — but in addition Q2 of 2019, which underscores the continued evolution and vitality of our choices,” IPG chief Philippe Krakowsky mentioned in an announcement. He later cautioned that the pandemic continues to create uncertainty in lots of elements of the world.
Still, recent tailwinds arrive as agencies stand at an inflection level the place they should reimagine their companies to heart extra on digital and data-driven features. Those developments have been urgent for years, however the pandemic quickly accelerated client adoption of channels like e-commerce, whereas adjustments to digital advertising and marketing — specifically Google’s deliberate deprecation of third-party cookies — are upending bedrock advertising and marketing methods, with model purchasers scrambling for tech alternate options and consultative assist.
Responding to these calls for, and with some of their conflict chests replenished, agencies are choosing up their advertising and marketing dealmaking. Publicis not too long ago introduced it might purchase CitriusAd, a platform that helps manufacturers optimize their advertising and marketing efficiency on e-commerce websites, to pair with its Epsilon data-marketing unit. Epsilon has performed an necessary position in Publicis’ turnaround, notching 31.1% development in Q2. Japanese advert large Dentsu bought artistic commerce providers agency LiveArea from PFSweb for $250 million earlier in July. Omnicom in April snapped up digital advertising and marketing agency Areteans as half of its strikes to supply entrepreneurs with deeper experience in digital transformation and buyer expertise.
On a name discussing the Q2 outcomes with analysts, Omnicom chief govt John Wren mentioned the group would proceed pursuing acquisitions in precision advertising and marketing, digital transformation, commerce, media and healthcare.
“We have ramped up our M&A efforts in these areas and are happy with the alternatives we’re seeing,” Wren mentioned on the decision. “We stay disciplined with respect to our strategic strategy and valuation parameters.”
At the identical time, the pandemic restoration could provide agencies the prospect to shed previous companies which are much less related or restructure operations as staff search new working fashions, together with hybrid and absolutely distant work. Omnicom divested its ICON International specialty media store in June.

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