Omnicom Forecast: Estimated 4% Growth, 2013 Looks Promising

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Omnicom executives told investors and analysts Wednesday to expect the company to deliver full-year 2012 organic revenue growth of between 3.5% and 4%. Given the iffy state of the global economy, if Omnicom does achieve that level of growth it will be “a pretty good performance," says CFO Randall Weisenburger.

Omnicom’s organic revenue growth -- considered a key performance indicator for the ad industry -- was 4.5% for the first nine months of the year and 3.5% for the third quarter, the highest of the four major ad holding companies.

While both Publicis and WPP earlier this week offered October updates on organic growth -- noting some improvement -- Omnicom did not. Publicis CEO Maurice Levy characterized the company’s 7% growth in the month as “spectacular.”

Omnicom CEO John Wren, who along with Weisenburger, spoke at a Morgan Stanley investor conference in Barcelona, said that he has not seen any signs of a global economic recovery that “the headlines around the Publicis announcement would suggest.”

Added Weisenburger: “We try to manage the year.”  And when public companies begin issuing monthly updates, “it starts to get a little bit silly.”

As for the fourth quarter, it’s as unpredictable as ever, said Wren, due to the uncertain level of project work that clients add around holiday campaigns. So far, he said, “there’s nothing out of the ordinary that we’ve seen.”

Wren added that Omnicom shops are currently in talks with clients about budgets for next year, a process that will continue for the next month or more. “It’s really too early to make a clear prediction” about 2013, he said. “People expect a lower growth environment across the globe, and that’s not a disaster,” because clients and agencies alike have been anticipating it.

Wren said he was “more optimistic about the back half of next year versus all the noise and uncertainty in the front of it. But that could change in a minute. I’m not hearing anything terrible or scary [about 2013] from any of the clients I’m talking to.”

Wren said that most of the CEOs he’s in contact with believe that Congress and the White House will come to an agreement over the so-called “fiscal cliff.” Both political parties “have skin in the game,” he noted.

The good news about Europe, Wren said, is for now the northern part of the continent has stabilized, albeit at lower growth rates. “It’s easier to manage in a stable environment,” versus a volatile one, he said. The challenge for agencies, he added, is to increase market share. “They’re not sitting around.”

Emerging markets will continue to show strong growth next year, Wren surmised, and the holding company will continue to expand operations in those areas. One example, he noted was Myanmar, which has recently begun to be more open to investment from the West. “Myanmar didn’t exist for us in 2012,” said Wren. “It will exist for us in 2013.”

For the industry, said Wren, “getting mobile right” is a key challenge. When that happens there will be a “seismic shift” in the deployment of marketing resources to the medium. “We are not there yet,” he said.

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