Omnicom optimistic about 2024 after 4.4% organic revenue growth in Q4

Executives also shed light on how strategic investments, such as the Flywheel Digital acquisition and significant investments into AI, combined with upcoming external factors – such as the Olympics, the 2024 presidential election and cookie deprecation – might shape the agency holding company’s trajectory in 2024.

Q4 & full-year financial highlights

In the fourth quarter, organic revenue grew 4.4%, which exceeded company expectations, while full-year organic revenue grew 4.1%.

The operating profit margin for the quarter was 16.3%, and the full-year margin was 15.2%. Earnings per share for the quarter was $2.20, up 5.3% from Q4 2022.

For the full year, earnings per share (EPS) was $7.41, an increase of 6.9% compared with the full year of 2022. In 2023, Omnicom generated $1.9bn in free cash flow and returned $1.1bn to shareholders through dividends and share repurchases.

Phillip Angelastro, Omnicom Group‘s vice-president and chief financial officer (CFO), said that the company‘s advertising and media business saw 9% growth, while healthcare grew 3%. Experiential marketing declined 8% and public relations slumped 2%, partly due to comparisons with the midterm elections of 2022.

Recent investments

John Wren, chief executive of Omnicom Group, told investors that the $835m deal for Flywheel Digital – the group’s largest ever acquisition – would transform the holding company.

“Flywheel opens up an entirely new market opportunity for Omnicom, transforming us from an advertising and marketing-focused company to a marketing and sales-focused company,” he said. “We can now seamlessly integrate end-to-end services, from brand media to precision marketing to e-commerce and in-store commerce.”

He added that the combination of Omni‘s audience and behavioral data with Flywheel‘s marketplace point-of-purchase data will equip Omnicom with an “unmatched set of data” its competitors can‘t replicate.

Duncan Painter, chief executive at Flywheel, was also part of the investor presentation. “I’m delighted to be part of the leadership group at Omnicom... It’s a unique opportunity – for the first time ever, we can give clients the ability to measure marketing and sales in one go”

Wren highlighted other areas of potential investment for the US group. He hopes that Coffee & TV, a recently acquired London creative studio focused on CGI and VFX, will help expand the newly formed Omnicom Content Studios. Influencer marketing was another priority, he said.

Eyes on AI

Keen to boast the group's AI expertise to investors, Wren said Omnicom has invested tens of millions of dollars into artificial intelligence (AI) in the last decade.

Recently, in June of 2023, Omnicom became the first agency holding company to obtain access to the latest Open AI GPT models with the launch of Omni Assist, a generative AI-powered virtual assistant that plans, executes and generates ad campaigns via a Microsoft partnership. The company also inked a deal with Getty Images’ generative AI tool in November, enabling its agencies to produce ads safely and legally for clients.

“Generative AI investments and partnerships to enhance our platforms and educate our knowledge workers are expected to require greater resources,” said Wren. “These investments will result in increased productivity and success for our clients. From e-commerce to influencers to generative AI, we are investing in all the areas that will shape the future of our industry.”

He also acknowledged the risks associated with the swift deployment of new technology like AI. “Technology always travels faster than society’s ability to absorb it and the laws and regulations that generally follow it, so we [must make certain that] we don’t expose clients to anything that can create a problem.”

2024 outlook

Armed with these recent acquisitions and investments, Omnicom enters the new year in a “position of strength,” as Wren put it, with organic revenue expected to range between 3.5% and 5% in 2024.

On the imminent deprecation of third-party cookies by the year-end, Paolo Yuvienco, executive vice-president and chief technology officer of Omnicom, said the company has been preparing for it for a very long time. “Omni has been purpose-built to address the cookieless world... we’ve also been preparing for it through deals we struck with various clean rooms to facilitate first-party data, as well as the acquisition of Flywheel and all of the data they bring directly from the marketplace.”

When addressing potential challenges in the upcoming year, Wren expressed optimism, stating: “We do have the Olympics, we do have a presidential election, but it‘s been my experience that presidential election years are generally very good ... for the economy. If there should be some tension in the media marketplaces, especially in the US as you get later in the year, that forces people to make decisions sooner ... We‘re cautious, but we‘re optimistic.”