Accuen Continues To Decline As Omnicom Clients Move Away From Trading Desks

Spend on Omnicom’s trading desk Accuen continues to decline as brands increasingly favor disclosed programmatic buying models.

Accuen’s Q4 revenue declined by $12 million globally and $17 million in the US year over year. Before Q3, when Accuen’s revenues first began declining YoY,  Accuen’s revenue had grown between $18 million and $45 million each quarter since 2014.

“Overall, the programmatic business is very strong, but we continue to see a transition of some clients moving toward a more traditional agency pass-through solution from our performance- based bundled solution,” said Omnicom Chief Financial Officer Phil Angelastro on the earnings call. “That’s a trend that we expect to continue.”

While “plenty of clients” are still comfortable with buying through Accuen’s nondisclosed model, they began to shift in 2016 toward a more disclosed method of buying, Angelastro said. That timing coincides with the ANA’s report detailing nontransparent buying practices at agency trading desks.

“The business grew quite a bit because it was brand new in '15 and '16,” Angelastro said. “In '16 the growth rate came down and then in '17, we’ve seen net negatives in reductions overall.”

Despite these declines, Omnicom’s programmatic business isn’t suffering, CEO John Wren told investors.

“Billings associated with [programmatic] are now up double digits,” he said. “The way we report them in a traditional rather than bundled sense has an impact on reported revenue, but it doesn’t have an impact on our profitability. Activity, expertise and profitability, we expect to go up.”

Omnicom’s advertising discipline grew 1.2% in the quarter, led by its media business, Angelastro said. CRM was up 3.4% after reorganizing the group’s units into a consumer experience unit, which focuses on direct and digital marketing, and CRM execution and support, which focuses on more traditional areas like field and point-of-sale marketing.

“In the consumer experience bucket, I have a lot of hope for upside,” Wren said. “Our shopper and promotion business increasingly is a digital activity. We’re doubling down in digital and precision marking and marrying it to the extensive investments we’ve made in analytics, so we can better target the consumer to deliver more effective messages for our clients.”

Wren credited client wins, including HP, McDonald’s and Intuit QuickBooks, to its new verticalized business structure. For HP, Omnicom integrated talent from nine agencies to create a standalone agency for the brand.

With about $15 billion worth of media accounts up for review already this year, Omnicom is defending about $2 billion in spend.

“We’re hopeful that the rest of that is opportunity to win our fair share,” he said.

Organic growth for the fourth quarter came in at 1.6% year over year, below expectations of 2.6%. Revenues for the quarter declined YoY by 1.5% to $4.2 billion. In the US, organic growth for the quarter was -0.8%.

For the full year, revenues decreased by 0.9% to $15.3 billion, with 3% organic growth.

1 Comment

  1. When first asked about Accuen revenue by analysts several years ago, Mr. Wren initially said Accuen's model was fully disclosed to clients. Then in the wake of the ANA transparency report he seems to have changed his story to acknowledge that it is a non-disclosed (arbitrage/ad network) model, which seems to coincide with Accuen trading desk revenues started to decline. It would be interesting to see an article laying the timelines out.

    Reply

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