While other holding companies are making flashy announcements about their AI roadmaps, Omnicom is focusing more on a different shiny object: retail and commerce media.
Omnicom closed its $845 million acquisition of ecommerce platform Flywheel Digital in early January – the biggest acquisition in the company’s history.
But the hefty price tag is worth it, Omnicom Group CEO John Wren told investors during the company’s Q4 earnings call on Tuesday, because it “opens up an entirely new market opportunity” for the holding company.
Flywheel Commerce Cloud contains product sales data, which complements the audience and behavioral data in Omni, Omnicom’s data and analytics platform. Together, these tools can help clients drive sales and better measure ROAS, Wren said.
The acquisition might also generate new business for Omnicom. For instance, Flywheel has deep expertise in consumer-packaged goods, he said, an area that “has never been as strong as it could be for Omnicom.”
And as third-party cookie deprecation continues, Flywheel data provides a better understanding of consumers without the need for cookies, according to Paolo Yuvienco, EVP and CTO of Omnicom.
Slow and steady
Yet as valuable as Omni’s “trove of data” is on its own, Wren said, generative AI can help employees use the data to make, plan and deploy ad campaigns more effectively.
In addition to weaving generative AI into Omni through partnerships with Microsoft, Google, AWS and Adobe, Omnicom has a virtual assistant tool called Omni Assist that uses large language models to “make the jobs of our people easier and the work for our clients better,” Yuvienco said.
For example, the tool can automatically summarize consumer insights and industry trends and identify ways to optimize performance across audience, media and content. Buyers can also use the assistant to draft a creative brief or media plan and automate audience matching between Omni and other media platforms. Employees can ask the tool questions via a conversational interface, à la ChatGPT.
Omnicom also has a deal with Getty Images to use the latter’s generative AI tool, which is trained only on Getty’s licensed photo library, “so our agencies can produce commercially safe and legally indemnified, customized images,” Wren said.
Yet unlike peer holdcos Publicis Groupe and WPP, Omnicom hasn’t come out with an AI strategy statement. But that doesn’t mean it’s sitting idly by either.
Omnicom has been testing models with its partners and working with a few clients who are “very aware of the risks associated with it,” Wren said, and understand that experimentation means “we’re going to break a few things.”
While Omnicom has “historically invested tens of billions of dollars in AI,” Wren said, generative AI remains “unknown territory.” It’s still a relatively new technology, with potential risks ranging from inaccuracy to copyright infringement to off-brand branding and messaging. Companies must tread carefully so as not to expose clients to risk, he said.
“Technology always travels faster than society’s ability to absorb it and the laws and regulations that generally follow it,” Wren said. “We’re going to put the client’s interest and safety above all.”
The big picture
Zooming out, Omnicom earned $14.7 billion in full-year 2023 revenue, a 4.1% organic increase from $14.3 billion in 2022. Its Q4 2023 revenue was $4.1 billion, up from $3.9 billion in the fourth quarter of 2022.
Advertising and media, which Omnicom treats as a single category, grew 9.3% in Q4 2023 compared to Q4 2022.
Omnicom forecasts full-year organic revenue growth of between 3.5% and 5% in 2024.
The company expects the pharmaceutical and auto sectors to stay strong and the Summer Olympics and the US presidential election to fuel revenue this year.
“Presidential election years are generally very good for the economy,” Wren said. “And there gets to be some tension in the media marketplaces, especially in the US, as you get later in the year. That forces people to make decisions sooner.”
