Category: Insights

With Halloween just around the corner and the IPA’s latest Bellwether talking of ‘stagnating’ marketing budgets in the UK, a fearless Barry Dudley of Green Square looks at Omnicom, Publicis, Havas, IPG and WPP’s Q3 results to see what horrors lie within. Both Omnicom and Publicis released their Q3 results last week and, despite some pretty mad things going on in the world right now, I’d say they are pretty good. Omnicom reported organic growth of 6.5% with revenues of $3.9bn, up from $3.6bn in Q3 of 2023. Key to this were a 9.4% increase for Advertising & Media and a very impressive 35.3% jump in Experiential. The Healthcare and Branding & Retail Commerce disciplines struggled, however, with 1.1% and 5.4% declines respectively. The latter is surprising as retail has been a hot area of late, with agencies such as Next15’s SMG roaring ahead. All geographies saw growth of between 6.5% (US) and 24.8% (Middle East & Africa), except for Other North America at 1.5% and a decline of 0.2% in the UK. This UK performance probably reflects the recent findings by the Institute of Practitioners in Advertising that said that many companies were ‘pressing pause’ on their marketing budgets ahead of the government’s budget next week. Publicis also delivered a strong performance in Q3, with organic growth of 5.8% to €3.4bn, up from €3.2bn in Q3 of 2023. Chairman and CEO Arthur Sadoun said: “Once again, we were able to gain market share by capturing a disproportionate amount of client demand for personalization at scale, with our combined media and Epsilon activities growing at almost 10%. All of our regions delivered strongly, with the US at +4%, Europe at +4.9% and APAC at +6.4%, with China accelerating to +12.4%”. Despite the “increasingly challenging macroeconomic environment,” Sadoun is maintaining his typical bullishness by upgrading the full-year organic growth guidance to at least 5.5%, up from 5%. Publicis was also on the front foot with its M&A activity, spending a tidy $1bn during the quarter on acquiring Influential, an influencer marketing platform, and Mars United Commerce, a commerce marketing company. Interpublic Group (IPG) released its results this week, with organic revenue ‘unchanged’ at $2.63bn from Q3 2023 ($2.68bn) – so quite some way behind Omnicom and Publicis. And the outlook for the full year also remains largely unchanged, with CEO Philippe Krakowsky commenting: “Looking forward, we are seeing a strong new business pipeline, for both Q4 activity and longer-term AOR opportunities, and we remain focused on achieving organic growth of approximately 1% this year.” Although this 1% is at the lower end of the 1% to 2% in previous guidance. In terms of regional performance, IPG’s strongest market was Latin America, with 9.8% organic net revenue growth. But its biggest market, the US, saw no growth, while Continental Europe was up 0.6%, UK down 0.7%, Asia Pacific down a lumpy 7.4% and All Other Markets were up 1.5%. That seems like there are quite a few headwinds in quite a few places – I’d hazard a guess that the upcoming US election is a factor for that geography. In times gone by, it could have been the likes of R/GA and Huge to bring bright news for IPG, but both are now ‘held for sale’ with conversations, according to Krakowsky, “a good way down the track.” Next up was Havas, reported within its parent company Vivendi’s results. Yannick Bolloré, chairman of Vivendi’s supervisory board, and Arnaud de Puyfontaine, CEO of Vivendi, said: “Vivendi has reported strong growth in the first nine months of 2024. The revenues of the Group increased by 4.5% at constant currency and perimeter compared with the same period in 2023. Canal+ experienced revenue growth across all of its activities. The performance delivered by Havas was particularly driven by Havas Media and the Europe and Latin America regions.” They subsequently added: “These performances confirm the strength of our main businesses and their capacity to become independent if the shareholders’ meeting convened on December 9, 2024, approves the group’s proposed split project.” A confident message around Havas and its potential independent stock exchange listing in the future. This seems a little at odds with a 2.3% organic revenue decline in Q2 and a 3.5% decline in Q3 against the corresponding periods in 2023, but a Q3 decline was forecast in Q2 mainly due to a ‘partial loss of a big client in the US.’ The hope in Q2 was for a return to organic growth in Q4 or maybe in 2025. Let’s see! Europe and Latin America had solid organic growth at 2.8% and 12.1%, respectively. Asia-Pacific and Africa declined 0.6% and, much like IPG, North America was a challenge with a 7.5% decline. But there was no slowdown in the Havas M&A team adding Hotglue, an Aussie ‘media agency and creative production company’ and DPMG in the UK, an ‘Adobe top 3 recommended independent agency.’ And then there was WPP. Mark Read, CEO, said: “Our third quarter delivered like-for-like growth in net sales, with a strong performance from GroupM in particular. We saw growth in North America, Western Continental Europe and India, though trading in China remains difficult.” He went on to say: “We are encouraged by progress during the quarter, but with recent new business wins primarily impacting 2025 and continuing macroeconomic pressures, our expectations for the full year remain unchanged.” An interesting point for me was the 7% growth in Q3 for its top 10 clients. Winning new clients is the lifeblood of the agency world, both for the maths as well as the excitement and challenge for the talent, and we regularly tell the businesses we work with that their existing clients should be the number one business development opportunity. More results are still to come and I expect the variety of fortunes to be extended further! Read more

There have been a lot of headlines recently around agency reorganizations – think Omnicom, Monks, Deloitte and IPG. Green Square’s Barry Dudley raises some questions that, as we approach the end of the year, agency owners should consider asking themselves. Earlier this week, I was caught by the headline of an article in another revered media business, the FT. It read, “PwC to embark on ‘unsettling’ overhaul.” Having spent some years in Andersen and then Deloitte through the dotcom boom and bust of the late 1990s and early 2000s, I have a lingering fascination for that world. I was expecting the piece to be about another round of redundancies – all of the Big Four accounting firms have been reorganizing and making cuts in recent times. There are indeed 2,700 staff and partners affected by the reorganization, but that doesn’t necessarily mean they will become redundant. So, what’s going on and what food for thought might there be for us in the creative, media, production and tech worlds? This is a UK-only initiative, led by senior partner Marco Amitrano and managing partner Laura Hinton, that is going to “simplify” the business and “reduce duplication.” As any business evolves, it encounters more and more complexity, which can sometimes add unwanted fat that goes unnoticed. Perhaps as a result of growth and absolute size, perhaps as it extends its offer, right through to handling things such as how WFH is built into operations.  

Food for thought 1

When did you last step back from your business to consider whether a reset or reorganization might be needed to perhaps simplify or rethink layers that may have started to make things harder, not easier? Another of the objectives was to “create scale and increase our market impact.”  

Food for thought 2

If you were to carry out some sort of review, what would the levers for scaling and creating market impact be? It’s relatively easy to look for places to cut costs; what’s not so simple is finding new ways forward that take the business to another level, turning the fat into muscle. Hinton told staff, “I know that, for some, change can feel energizing, while for others, it can be unsettling.” With the creation of six new teams, including a standalone ‘digital delivery unit’ covering tech, innovation, AI engineering, cloud and data, it sounds as if there is going to be quite a bit of nervousness for many people.  

Food for thought 3

What lessons did you learn from how your staff reacted the last time you added a new dimension to your business and changed old ways for new ones? Change is never simple, but when the term AI creeps into the mix, it will almost certainly make some mildly terrified – it needs to be planned and confidently managed.  

Food for thought 4

This is a repetition of a food for thought in a piece I did on Next 15 and S4’s results – Whether you think AI is going to turn things on their heads or it’s going to just be something that makes your existing business a little more efficient, you have to have a view. And you have to demonstrate knowledge and confidence around AI to your clients and prospects, not least because they are likely to know less than you!   PwC is clearly going on the front foot with this! So, AI can’t be ignored, but for me, humans possess magical and unique creative capabilities that will never become automated. Jo Bacon, the new Group CEO of M&C Saatchi UK, summed things up really well when she recently spoke to The Drum: “At the end of the day, I think creativity is human; there is a human element to all creativity. AI is an idea that humans have had to train, so a truly original idea cannot be created by AI. “AI does have an important role in any agency’s future, but I think it will be used as an efficiency tool for production and an effectiveness tool; it’ll never be trained to replace human creativity. It doesn’t have that human edge to have an emotional conversation. Of course we’re investing in AI, but we have a lot of great creatives that are still writing great content and great stories. Excellent storytelling is still very much at the heart of what we do here.” Read more