AD Agencies
Ad agencies globally turning to video and digital formats
NEW DELHI: Around 48.3 per cent of ad agencies have said a majority of their RFPs (requests for proposal) included a video ad component in 2014, as against 38.1 per cent in 2013 and 30.2 per cent in 2012. The findings are part of a survey by BrightRoll which claims that online video ads are becoming mainstream.
Agencies are turning to online video because they believe in its effectiveness. The survey found that 72 per cent believe that online video advertising is as or more effective than TV spots. Just 18 per cent see online video ads as less effective.
BrightRoll also found that 22 per cent of agencies plan to devote the majority of their digital video budgets to programmatic ad buys in the next 12 month – up from six per cent in last year’s survey.
“Programmatic video is going mainstream with agencies because it has proven to be effective in shifting consumer perception. Agencies told us they are investing with confidence, measuring consumer behaviour directly, and effectively engaging audiences across screens using programmatic video,” says BrightRoll vice president global marketing Guy Yalif.
The most important metrics for ad agencies are completed views (20 per cent), conversion (18 per cent), and brand lift (17 per cent). Click-through rates, once seen as key, are now less important, coming in fifth.
With mobile video viewing on the rise, so is mobile video ad spending: 79 per cent of respondents were likely or very likely to devote some of their video ad budgets to tablets, a rise from 68 per cent in 2014.
Meanwhile, another study shows around 28 per cent of marketers have reduced their advertising budget to fund more digital marketing.
In 2015, search engine marketing (SEM) will continue to capture the largest share of online spend at 47 per cent, or about 14 per cent of the firm’s total marketing budget 2014.
Worldwide social network ad spending reached $16.10 billion in 2014, a 45.3 per cent increase from 2013 that pushed social’s share of overall digital ad investment to 11.5 per cent. Combined social network ad dollars from North America, Western Europe and Asia-Pacific represented 93.7 per cent of global expenditure.
Spending on paid media in the US totaled $179.80 billion in 2014. Digital accounted for 28.2 per cent of total ad investments, with 10.6 per cent going toward mobile. Digital ad spending rose 17.7 per cent in 2014 and will rise another 15.5 per cent in 2015, fueled by mobile.
Digital ads will lead the way for global media growth in the next four years, accounting for 33 per cent of total advertising revenue, nearly catching TV in the process. TV advertising will generate $173.7 billion worldwide in 2014 and grow to $214.7 billion in 2018. During the same period, Internet advertising will grow from $133 billion to $194.5 billion.
Total entertainment and media spending on digital services is forecast to grow at a 12.2 per cent compound annual growth rate (CAGR) between 2013 and 2018 and account for 65 per cent of global entertainment and media spending growth, excluding spending on Internet access.
By 2018, Internet advertising will be poised to overtake TV as the largest advertising segment. As recently as 2009, Internet advertising revenue was $58.7 billion and TV advertising revenue was more than twice as big at $132 billion. But Internet advertising revenue will rise at a 10.7 per cent CAGR to reach $194.5 billion in 2018, just $20 billion behind TV advertising.
Two-thirds of revenue growth from consumers and advertising will be digital. Of the $241 billion growth in total entertainment and media consumer and advertising revenue from 2013 to 2018, $157 billion will come from digital sources.
Marketers spent $4.4 billion on mobile advertising in the US in 2012. That figure doubled to $8.5 million in 2013; and that figure is projected to quadruple to $31.1 billion by 2017. Search advertising accounts for about half of the total.
Just one per cent of all US advertising spending is on mobile platforms, compared to 43 per cent for TV and 29 per cent for print.
More than 40 per cent of US marketing professionals said they increased spending on data-driven marketing in the first quarter of this year, compared with 38.4 per cent who said the same in Q4 2013. More than 40 per cent of US marketing professionals said they increased spending on data-driven marketing in the first quarter of this year, compared with 38.4 per cent who said the same in Q4 2013.
Digital marketers spend almost as much to keep buyers (45 per cent) as they do to gain new ones (55 per cent).
Meanwhile, US marketers spend an average of 2.5 per cent of their total company revenue on digital marketing activities, according to a new report by Gartner Inc. US marketers spend an average of 2.5 per cent of their total company revenue on digital marketing activities, according to a new report by Gartner Inc.
According to Duke University’s CMO Survey, digital marketing spending is forecast to grow by 10.2 per cent, a slower rate than the 11.5% increase forecast in August 2012, but a healthy rate nonetheless.
AD Agencies
Omnicom posts $6.2 bn Q1 revenue, EBITDA margin rises to 14.8 per cent
AI push and cost synergies lift margins in first full quarter post-merger
NEW YORK: Omnicom has reported a robust first quarter following its acquisition of Interpublic Group, signalling early gains from integration, cost efficiencies and a sharper focus on AI-led services.
The results mark the first full quarter with Interpublic’s operations included, offering a clearer view of how the combined entity is shaping up. Revenue from core operations stood at $5.6 billion, up $345 million year on year on a combined basis, while organic growth came in at 3.9 per cent. Adjusted EBITDA margin rose sharply by 240 basis points to 14.8 per cent, reflecting early synergy benefits.
“We’ve seen momentum and cohesive growth across the organisation,” said Omnicom chief executive officer John Wren. “Our results demonstrate the benefits of realigning our portfolio and moving decisively on integration.”
A key part of that realignment involves shedding underperforming assets. Omnicom has identified businesses worth roughly $3.2 billion in annual revenue for disposal, with about $1 billion already exited in the first quarter. The company expects to complete most of the remaining divestments over the coming quarters, sharpening its focus on higher-growth, higher-margin operations.
On the bottom line, adjusted earnings per share rose 11.8 per cent to $1.90, underlining the financial impact of cost discipline and integration. The company is targeting $900 million in cost synergies by 2026, rising to $1.5 billion by mid-2028.
“We are realising significant cost reduction synergies while continuing to invest for growth,” said Omnicom chief financial officer Philip Angelastro.
Beyond the numbers, the strategic pivot is becoming clearer. Omnicom has restructured its business around “core operations”, stripping out assets earmarked for sale to highlight the segments driving future growth. More than half of its revenue now comes from integrated media, which includes data, commerce, CRM and content automation, areas that are growing faster than traditional advertising.
Indeed, integrated media led growth in the quarter with high single-digit gains, while PR and experiential businesses delivered mid-single-digit growth. Healthcare posted modest gains, while traditional advertising lagged, reflecting a broader industry shift towards performance-driven and tech-enabled marketing.
Central to this transformation is Omni, the company’s AI-powered marketing and sales platform. Rolled out across the organisation during the quarter, the system connects data, talent and services while enabling AI-driven workflows.
The platform is already delivering tangible results, improving media performance, speeding up campaign execution and enhancing measurement capabilities. Integration with partners such as Adobe and Amazon is further expanding its reach.
“We’ve put the latest agentic AI tools in the hands of all our employees,” said Wren, highlighting the company’s push towards automation and data-led decision-making.
The shift is also reshaping client relationships. Omnicom reported new business wins with major brands including IBM, GSK and John Deere, while expanding engagements with existing clients such as Unilever and Exxon. Increasingly, clients are opting for consolidated partnerships, relying on a single provider for end-to-end marketing and sales services.
“There’s a clear trend of clients choosing one partner to manage most of their needs,” said John Wren. “Our integrated model makes that easier.”
Geographically, the US remains the largest market, contributing 61 per cent of revenue, followed by Europe and the UK at 21 per cent. Growth was strongest in the US, with other regions posting modest gains.
The balance sheet remains solid despite increased debt following the acquisition. Long-term debt stood at $10.2 billion at the end of the quarter, while liquidity was supported by $4.3 billion in cash and a $3.5 billion revolving credit facility. The company is also returning capital to shareholders, repurchasing $2.8 billion worth of shares in Q1 as part of a planned $5 billion buyback programme.
Looking ahead, Omnicom remains optimistic but cautious. While the company expects double-digit EPS growth for the year, it acknowledged ongoing geopolitical uncertainties, particularly in the Middle East, though the region accounts for less than 2.5 per cent of revenue.
The integration of Interpublic is still in its early stages, but the initial signs point to a business that is not just bigger, but structurally different. With AI at its core, a streamlined portfolio and a growing tilt towards integrated services, Omnicom is betting that scale, simplicity and smart technology will keep it ahead in an increasingly complex marketing landscape.
If the first quarter is anything to go by, that bet is already starting to pay off.
