Amid a backdrop of mounting economic uncertainty and global market volatility, advertising giant Omnicom Group revised the lower end of its 2025 organic growth forecast, citing concerns about the potential impact of tariffs on client spending.
The New York-based holding company, whose portfolio includes prominent agencies such as BBDO, TBWA and Omnicom Media Group, said it now anticipates organic revenue growth of 2.5 to 4.5 percent for the year. The company’s previous projection, issued earlier in 2025, had placed that range between 3.5 and 4.5 percent.
Executives emphasized that the revision was driven by caution, not by a definitive slowdown in client demand. “As you’re all keenly aware, there’s been increased volatility in the economy and the markets,” John Wren, Omnicom’s chairman and chief executive, said during the company’s first-quarter earnings call on Tuesday. “We’re assessing the implications of these events to determine how they will affect our clients and our business.”
Revenue in the first quarter reached $3.7 billion, up 1.6 percent from the same period a year earlier. Organic revenue, which excludes the effects of currency fluctuations and acquisitions, rose 3.4 percent.
Despite a murky economic outlook, Wren noted that marketers continue to invest in brand development and customer engagement in an effort to maintain or grow market share.
“Organic revenue growth for the first quarter was 3.4%. We are assessing the implications of economic and market events to determine how they will affect our clients and business for the remainder of 2025. While uncertainty has increased, one thing hasn’t changed and will always be true – Omnicom is a trusted partner for our clients, offering strategic advice to grow their sales while delivering flexibility, value and performance,” said Wren, Chairman and Chief Executive Officer of Omnicom.
He added, “I am confident that our diversified portfolio and strong balance sheet, together with our experienced leadership teams, will allow us to navigate this challenging economic environment. We are also very excited about the expected closing of the Interpublic acquisition in the second half of this year. It will give the combined company substantial opportunities for revenue growth and distinctive cost synergy potential to drive increased profitability, EPS growth, and free cash flow.”
To an analyst question on the impact of the IPG deal on organic growth and potential disruptions in business, Wren said, “We have not had any clients of any significance that we’re in fear of losing because of the (IPG) transaction… That’s just nonsense fed by my competitors to the trade rags…that we’re going to lose people, lose accounts, lose business. Not true,” said Wren.
Omnicom Q1: The Numbers
Revenue in the first quarter of 2025 increased $59.9 million, or 1.6%, to $3,690.4 million. Worldwide revenue growth in the first quarter of 2025 compared to the first quarter of 2024 was led by an increase in organic revenue of $121.9 million, or 3.4%. Acquisition revenue, net of disposition revenue, reduced revenue by $2.8 million, or 0.1%. The impact of foreign currency translation reduced revenue by $59.2 million, or 1.6%.
Organic growth by discipline in the first quarter of 2025 compared to the first quarter of 2024 was as follows: 7.2% for Media & Advertising, 5.8% for Precision Marketing, and 1.9% for Execution & Support, partially offset by declines of 4.5% for Public Relations, 3.2% for Healthcare, 1.5% for Experiential, and 10.0% for Branding & Retail Commerce. In the first quarter of 2025, Omnicom realigned the classification of certain services, primarily within our Media & Advertising, Branding & Retail Commerce, Precision Marketing, and Public Relations disciplines. As a result, they reclassified the prior year periods to be consistent with the revised classifications.
Organic growth by region in the first quarter of 2025 compared to the first quarter of 2024 was as follows: 4.6% for the United States, 1.7% for Euro Markets & Other Europe, 6.0% for Asia Pacific, and 14.8% for Latin America, partially offset by declines of 3.6% for Other North America, 0.7% for the United Kingdom, and 9.3% for the Middle East & Africa.
Expenses
Operating expenses increased $86.2 million, or 2.7%, to $3,237.8 million in the first quarter of 2025 compared to the first quarter of 2024. Included in operating expenses in the first quarter of 2025 are $33.8 million of costs related to the pending acquisition of The Interpublic Group of Companies, Inc. (“IPG”).
Salary and service costs increased $53.7 million, or 2.0%, to $2,746.3 million. These costs tend to fluctuate with changes in revenue and are comprised of salary and related costs, which include employee compensation and benefits costs and freelance labor, third-party service costs, and third-party incidental costs. Salary and related costs decreased $66.8 million, or 3.6%, to $1,780.5 million, primarily due to the reduction arising from our repositioning actions in 2024 and global employee mix. Third-party service costs include third-party supplier costs when the company acts as principal in providing services to clients. Third-party incidental costs that are required to be included in revenue primarily consist of client-related travel and incidental out-of-pocket costs, which are billed back to the client directly at the company’s cost. Third-party service costs increased $98.6 million, or 14.1%, to $796.8 million, primarily as a result of organic growth in Media & Advertising and Precision Marketing disciplines. Third-party incidental costs increased $21.9 million, or 14.9%, to $169.0 million, primarily as a result of organic growth.
Occupancy and other costs, which are less directly linked to changes in revenue than salary and service costs, increased $0.5 million, or 0.2%, to $314.6 million.
SG&A expenses increased $32.6 million, or 38.2%, to $117.9 million. Included in SG&A expenses in the first quarter of 2025 are $33.8 million of acquisition related costs.