Omnicom grew 10.2% in 2021 as pandemic impacts recede

Precision marketing now accounts for 8% of the holding company’s revenue as clients’ digital transformation needs grow.

By Alison Weissbrot

Omnicom reported Q4 and 2021 full year earnings on Tuesday that indicate the holding company has moved on from the worst of the pandemic.

Worldwide revenue grew 2.6% to $3.85 billion in Q4, an organic growth rate of 9.5%. For the full year, Omnicom grew organically by 10.2% as revenue increased 8.5% to $14.29 billion.

Profit margins were strong, growing 1.3% to a 16.1% margin for Q4, and increasing by 37.5% to a 15.4% margin for the full year.

In the U.S., Omnicom’s largest region, the holding company grew 7.8% organically in Q4. Growth in the U.K. was 10.8%, followed by 7.8% growth in Asia-Pacific and 12.7% in the rest of Europe for the quarter.

The results come on top of tough comps, as Omnicom’s 2020 revenue declined more than 40% year over year.

But Omnicom sees strength in its future and is projecting 5% to 6% growth in 2022 – much higher than the 1% to 3% growth it had been posting consistently prior to the pandemic.

On an earnings call with investors on Tuesday, Omnicom CEO John Wren attributed growth to “the wins we’ve had this year, both with new clients and growth with existing clients.” Omnicom won global remits from PhilipsMercedes-Benz and Home Depot last year as clients looked to consolidate their accounts with a single global partner.

“Our objective is to increase the number of clients who consolidate their services with Omnicom,” Wren said. “That is a significant growth opportunity for us.”

Wren also attributed strength to Omnicom’s increased focus on and investment in precision marketing, performance marketing and digital transformation.

Omnicom Precision Marketing Group, which offers mar tech and digital transformation consulting and services, grew more than 19% in 2021 to make up 8% of Omnicom’s total revenue. As a comparison, advertising and marketing grew 10.7% organically, while PR and healthcare grew roughly 4% organically year over year.

Omnicom is investing more in these areas in 2022, as well as AI, automation, data and analytics, e-commerce, gaming and the metaverse, and plans to ramp up M&A after completing multiple dispositions across its portfolio. The holding company acquired performance marketing agency Jump 450 in October and digital health agency Propeller in February.

“We’ve been able to ramp up our M&A engine, which had been dormant from 2016 to 2018, both at corporate and in practice areas where we’ve decided to focus on growth,” Wren said. “These are the types of services that will be required in the future.”

As Omnicom heads into 2022, it faces a tough talent market with rising wage inflation. The holding company ended 2021 with the same global headcount it had before the pandemic – roughly 70,000 people – but is looking to outsource and automate more to create efficiencies as wages rise.

Omnicom also expects certain costs to re-enter the business, such as office space and business travel, as normal business conditions resume. The holding company bought a building in London’s South Bank where it’s opening a new campus after exiting more than 20 leases across the city.

“2021 was not a normal year,” said Omnicom EVP and CFO Phil Angelastro. “Not all the costs have come back into the business.