There’s no sugarcoating the fact that this week’s announcement of Omnicom PR Group’s Q2 earnings performance was a shock to the industry.
A year-over-year drop of 9.3% in revenue can primarily be put down to performance at the Omnicom unit’s two principal PR firms, FleishmanHillard and Ketchum. Its other shops include Porter Novelli and MMC, which have both been doing well, and DC firms such as GMMB, Vox Global, Plus Communications and FP1 Strategies.
In the equivalent quarter in 2024, OPRG grew 0.9% year over year, a much better performance that was boosted by election-related assignments, but hardly a tough comparable.
Omnicom CFO Philip Angelastro cited “weaker performance” in PR’s global networks and some reduction relative to the “benefit in 2024 from national election spend.” He added that the holding company expects to see a “difficult comp” for the rest of 2025 for the PR segment.
In puts into context Omnicom PR Group CEO Chris Foster’s announcement last week that he was starting the process of seeking a new CEO at Ketchum to replace Mike Doyle, who leaves the agency at the end of this month.
Foster will play a more active role in directly managing Ketchum until such time as is “appropriate” to bring on a new leader for the firm. He has now replaced the CEOs at all four of OPRG’s main agencies since he took on the role in June 2021.
Overall, Omnicom’s Q2 results were quite promising, certainly in the way it reports its numbers, with organic growth of 3% at a margin of 15.3% and a commitment to stand by its growth prediction of 2.5-4% for the rest of the calendar year. Its largest market, the U.S., also had organic growth of 3%.
Its media and advertising segment was up 8%, though most of that was down to strong growth in media. Advertising was mixed and CFO Angelastro noted that “the creative business was basically flat to slightly down in the quarter,” with stronger performance outside the U.S. market.
Healthcare was down 5%, due to the continued impact of the Pfizer client loss and work winding down on brands that are close to loss of patent protection. The CFO expects improved performance here as the year progresses.
The tone of the earnings call was it’s a case of if rather than when the acquisition of IPG by Omnicom is ratified and there were many assumptive statements in the answers to analysts’ questions about what would happen after the deal completion.
“Media is probably the strongest area within the industry,” said CEO John Wren. “Media is a very, very strong area, which continues to grow. I think our increased size will benefit us as we move forward and complete the transaction.”
He added an amusing note about the current market dominance of his company and Publicis and the fact that he tried to bring those holding companies together a decade ago, without success.
“If you objectively look at the industry, at least for the last two years out of the people who we consider competitive in the set, two of us continue to win [Publicis and Omnicom] and the others continue to suffer at one pace or another. By the way, those are the same two that I tried to merge with a decade ago. So I wasn’t wrong then and probably won’t be wrong this time [with IPG].”
Of course, some might say a combined Publicis-Omnicom wouldn’t have launched AI bot Marcel and achieved the same success as it has done under the leadership of Arthur Sadoun.
Wren expects the impact of tariffs to settle down by the end of 2025. “The Trump administration hasn’’t issued final guidelines nor conclusions about some key markets that our clients operate in,” he said. “And so I think it’s business as usual for the most part.”
He added that “Washington will bring a lot of clarity to this over the rest of this quarter” and Omnicom will be able to plan better as it moves into the fourth quarter and into the future.”
Meanwhile, in Paris, Publicis continues to lead the way in terms of marketing services holdcos and posted Q2 organic net revenue growth up 5.9%. Organic revenue growth in North America was 5.8%, 5.3% in the U.S., driven by media, creative and, less so, by its digital consulting arm Sapient. Publicis is also stronger in Asia Pacific than its competitors, growing 5.7% in Q2, 5.2% in China, again benefiting from media sector wins.
The Sadoun-led entity provides virtually no detail on the performance of its PR capabilities, which principally lie under the MSL brand. To be honest, PR barely gets a mention in the earnings.
According to PRWeek’s latest Agency Business Report, MSL grew revenues 3% globally in 2024, from $425.7 million to $438.5 million. In the U.S. the Diana Littman-led firm grew 6%, from $77.3 million to $82 million.
In its results today, Publicis announced it was increasing its growth projections upward, from 4% to 5%, an impressive statement in the current tough market. Its operating margin is also up, to 17.4%.
The Connected Media segment is driving 60% of growth with big accounts such as Mars and Paramount won through the scale of Publicis Media backed up by the proprietary data and technology of its Epsilon unit.
WPP already issued a profit warning last week in advance of its scheduled Q2 earnings release on August 7, so expectations for that have already been set. Interpublic Group reports its Q2 numbers next Tuesday and it will be exceptionally interesting to see how they are doing, especially in the PR segment where Weber and Golin have been leading the way in the industry for the past couple of years.
Despite the acceptance that it adds significant value and is respected more than ever in the C-suite, PR is particularly suffering from confusion around tariffs, the decline of purpose-related work that fueled growth at many agencies for a few years, rightsizing for an AI future, geopolitical uncertainty and a general lack of stability in the wider business environment.
Getting the PR agency train back on its rails is going to require strong leadership, smart strategic thinking and bold moves from the big players in the market such as Chris Foster, Richard Edelman, Susan Howe, Corey duBrowa and others – and it is opening up opportunities for flexible and entrepreneurial small and medium-sized operators.
