LONDON: Omnicom Group revenues in the Middle East and Africa plunged in the first quarter amid a global slowdown in advertising spending as people stayed at home.
The company, with clients that include McDonald’s and Johnson & Johnson, reported a 29.7 percent plunge in revenue growth in the Middle East and Africa — worse than any other region.
Now the group is cutting jobs and furloughing staff in a bid to reduce costs “While we expect the pandemic to affect substantially all of our clients, certain industry sectors have been affected more immediately and more significantly than others, including travel, lodging and entertainment,energy and oil and gas, non-essential retail and automotive,” the company said in a filing. “Clients in these industries have already acted to cut costs, including postponing or reducing marketing communication expenditures.”
Lockdowns have hit the tourism and energy sectors hard in the Middle East, as the collapse in oil prices reduced income for the Gulf’s big oil exporters while at the same time tourist hot spots such as Dubai are emptied of high-spending visitors.
Omnicom’s first-quarter revenue fell 1.8 percent to $3.41 billion, slightly ahead of analysts’ average estimate of $3.36 billion, according to Refinitiv data.
But the slowdown in advertising spending as the global economy shrinks, points to a tough year ahead for the industry “While we have a diversified portfolio of service offerings, clients and geographies, demand for our services can be expected to decline as marketers reduce expenditures in the short-term due to the uncertain impact of the pandemic on the global economy,” Omnicom said.
“As a result of the impact on our business, each of our agencies is in the process of aligning their cost structures, including severance actions and furloughs to reduce the workforce, and tailoring their services and capabilities to changes in client demand.”