Omnicom Delivers Solid Performance, Economic Outlook Cloudier

After posting a robust second quarter, Omnicom CEO John Wren said Tuesday that the economic outlook in the U.S. looks less auspicious than earlier in the year and the holding company expects "moderate growth" in the back half of 2011.

"Though the job picture and the pace of economic improvement is more negative than it was last quarter and we remain concerned about the failure to complete a debt-ceiling deal, we believe that this situation will improve over the coming weeks and months," Wren said on a conference call.

Congress is trying to hammer out a deal with President Obama on a plan to cut federal spending and avoid a default early next month.

Wren said clients' spending plans continue largely unaffected, but that back-and-forth pattern has caused some near-term uncertainty. An agreement looked promising Tuesday.

"Short of that, everybody has been very consistent so far in terms of what their (planned spending) is for the balance of the year," Wren said.

Omnicom, which operates the OMD and PHD media agencies, posted 8.1% organic growth in the U.S. in the April-July quarter. That was slightly below the 8.2% figure for the period last year, but nearly double the growth in the first quarter of 2011.

MediaPost reported Tuesday that Philips has placed its global media and creative accounts into review. Creative has been handled by Omnicom's DDB since 2003. Media is handled by Aegis Group's Carat.

Asked about social media affecting business, Wren said it has become commonplace as part of any advertising or other campaign. Every initiative has "some social marketing component to it and it's becoming just part of the normal process that we go through in terms of wanting to ... extend the messaging."

The U.S. accounts for 51% of Omnicom's revenues. The company recently made a major push to expand its presence in China, and Wren said it would continue to move aggressively in other emerging markets.

"We expect to increase our acquisitions activities in other high-growth developing markets," Wren said.

In the second quarter, overall domestic revenue was up 7.8% to $1.76 billion. Outside the U.S., revenue soared 22.7% to $1.72 billion. Global profit was up 13.1% to $275.1 million.

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