American agency holding group Omnicom has reported its Q1 financial results, posting organic growth of four percent, with revenues reaching $3.6 billion. Flywheel Digital, a digital commerce platform bought by Omnicom last year, was a significant contributor to this growth, according to Omnicom executives. And Flywheel was the major topic of discussion on Omnicom’s earnings call following the results, with Omnicom positioning Flywheel as central to its future prospects. Flywheel was mentioned 64 times on the call, far more than the agency topic du jour generative AI, which came up 13 times.
Flywheel sits within Omnicom’s ‘precision marketing’ segment, which saw 4.3 percent organic growth in Q1. This was above average compared with other segments, but not the best performing part of the business – Omnicom’s core ‘advertising and media’ segment was up by 7 percent.
However now that Flywheel is fully integrated, Omnicom expects its precision marketing segment to start posting faster growth. Omnicom CEO John Wren said the company is forecasting low double-digit growth for that part of the business this year, with high expectations for its impact on revenues further down the line.
Redefining Omnicom’s positioning
Retail media and commerce media are both high growth areas in the industry, and retail data is likely to play a larger role across digital advertising as advertisers look for reliable targeting and measurement data to fill gaps left by third-party cookies. All of the agency holding companies are therefore investing heavily in their retail and commerce data capabilities. But Wren believes Flywheel, its largest ever acquisition at a price of $835 million, is a unique asset.
“First and foremost, they’re the only fully integrated retail commerce cloud platform that’s out there,” said Wren. “What they have is an incredible amount of knowledge and information about how people transact and do business on an online e-commerce basis. And not only here domestically in the United States […] they have a global presence. They’re right at the cutting edge of people buying online and using e-commerce.”
“What it allowed us to do as well is to combine [Flywheel’s] Commerce Cloud, which looked at the retail sales aspect of what happens when you’re are trying to market something to someone, it enables us to connect to Omni Assist,” said Wren. “So we can go all the way from identification, brand building, audience building, all the way through to the actual sale that occurs in a local e-commerce environment and there’s no one else that can do that.”
The key for Omnicom is in taking Flywheel’s commerce data, gained from its integrations into over 400 digital marketplaces, and combining it with Omnicom’s wider dataset to inform targeting and measurement. For example, Wren said Omnicom is already connecting up its influencer business with commerce and retail outcomes from Flywheel, and running holistic video measurement and optimisation by integrating Omni’s video viewership data with Flywheel’s commerce outcome insights.
Wren went as far as to suggest that Flywheel redefines Omnicom’s overall positioning. “We now refer to ourselves as a marketing and sales company rather than simply an advertising and marketing company,” he said. “And that’s because we can go end-to-end legitimately for the very first time.”
As mentioned above, Omnicom isn’t the only agency group which has invested in retail and commerce media capabilities. Publicis for example also describes CitrusAd, its own acquisition made in 2021, as a unique advantage. Time will tell whether either of these assets really proves more effective at capitalising on retail media’s growth and ends up being a real point of differentiation for its owner.
