Ad holding companies have reported that second quarter earnings are on the decline. Interpublic Group of Cos. and Omnicom Group reported weaker-than-expected organic revenue in the second quarter as spending cuts from tech and telecom clients dragged on results. 

Major advertising holding companies had, for the most part, enjoyed strong growth in 2022 and early this year, shrugging off fears that any economic slowdown and inflation would severely hurt spending from marketer clients. Interpublic’s earnings report Friday morning, however, showed that organic net revenue in the second quarter declined 1.7%, following a 0.2% drop in the first quarter. Organic net revenue removes the effects of currency fluctuations, acquisitions and disposals. Analysts had expected IPG to see organic growth of 1.1% in the second quarter, according to FactSet.

IPG lowered its guidance for organic growth in 2023 to a range of 1% to 2%. Its previous estimate was for 2% to 4% growth.

Omnicom Group, which owns agencies such as BBDO, DDB and TBWA, reported second-quarter organic revenue growth of 3.4% in earnings released Tuesday, below an analyst consensus estimate of 4.2%, according to FactSet.

For the first six months of 2023, revenue from the pharmaceuticals and healthcare, food and beverage and automotive sectors increased in 2023 versus the same period in 2022, but the technology and telecommunications sectors decreased.

Omnicom raised the lower end of the range for its guidance on organic growth this year, lifting it to 3.5% from an earlier estimate of 3%. It left the high end of the range unchanged at 5%. 

Analysts, however, questioned factors such as slowing demand for specialty services including precision marketing and digital business transformation. Omnicom had positioned those services as key to its growth as clients spend less on traditional creative work.

Meanwhile, Paris-based competitor Publicis Groupe said Thursday that it saw organic growth of 7.1% in the second quarter, higher than the 4.3% consensus estimate, according to FactSet. It attributed its growth to a well-weighted revenue mix and tailwinds from new business. 

Publicis, which owns agencies such as Saatchi & Saatchi, Leo Burnett and Zenith, said it now expects to see organic growth in 2023 of about 5%. Previously, the company said it expected to hit organic growth this year in the top half of its former stated range of 3% to 5%.

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