Omnicom is shedding nonstrategic assets to invest in data, technology and analytics.
That strategy was made clear by management on the company’s Q2 and H1 earnings call Tuesday, when Omnicom reported organic growth in North America was down 0.9% for Q2 and 0.5% for the first half of the year. Worldwide revenues for the quarter were up 1.8% to $3.9 billion and up 1.5% to $7.5 billion for the half-year.
“We continue to evaluate our portfolio for nonstrategic businesses for disposition,” said Phil Angelastro, chief financial officer at Omnicom. “And we’re pursuing certain acquisitions.”
Many of the divestment targets sit under Omnicom’s CRM execution and support group, which offers services such as research, field marketing, point-of-sale, sales support and merchandizing, and which was down 4.4% for the quarter. (That’s not to be confused with Omnicom’s CRM consumer experiences group, which focuses on identity-based marketing and grew 7.1% last quarter.)
In Q1 of last year, Omnicom disposed of print media business Novus. And on Monday, it announced it would sell European sales and support outsourcing group Sellbytel to Webhelp Group, a transaction that is expected to close in Q3.
Omnicom doesn’t have a divestment road map but will rather look for strategic opportunities to offload certain assets, Angelastro said.
“We’re contemplating these disposals like Sellbytel not because of current performance,” he said, “but because of our expectations and what we think strategically these businesses mean for our long-term plans.”
As Omnicom jettisons legacy businesses, its hopes to acquire in areas like data, analytics, technology and business transformation. Omnicom CEO John Wren didn’t mention specific companies, but said Omnicom looked at Acxiom Marketing Services before it eventually went to IPG for $2 billion.
“We have gone on the side of renting the data versus buying the company that compiles the data,” said Omnicom Digital CEO Jonathan Nelson on the call. “We believe this enhances our position of neutrality and removes any perceived conflict we might have with our clients.”
Annalect this!
Omnicom is also investing more in its internal data and analytics capabilities through Annalect. Wren talked about the group’s new Omni data platform, which connects targets audiences along their customer journey, as well as a new data and analytics platform for Omnicom Health Group.
“We’re making substantial ongoing investments in Annalect, which now has more than 1,000 professionals dedicated to developing superior analytical tools,” Wren said. “It’s the foundation for developing transformational capabilities across the group.”
As for programmatic, Accuen shrank by $7 million in revenue globally in Q2, $5 million of which was in the US, as clients moved from nondisclosed to disclosed buys.
“Some of the pressure we’ve had in programmatic area has been primarily in the US, where we’re going from bundled to unbundled,” Wren said.
Clients, particularly CPGs, are still cutting agency budgets as they battle new competitors in both product and distribution, Wren said.
“They’ve certainly been under an incredible amount of pressure,” he said. “I don’t see any immediate turnaround in that area. I see continuing pressure for the foreseeable future.”
This post was syndicated from Ad Exchanger.
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