Omnicom Posts 5.3% Organic Growth For Q2

Omnicom's second-quarter revenues fell 1.7% to $3.8 billion, largely due to the negative impact of foreign exchange rates of 7.1% versus Q2 2014. Net income was down marginally to $313.9 million and was impacted by a tax benefit of $11 million related to the failed merger with Publicis Groupe which was terminated last year. 

Organic revenue growth for the period was 5.3%. Regional organic growth rates included 5.9% for North America, 5.4% for the UK and 3.9% across Europe. APAC was up 7.6%, while Latin America fell 9.6%. 

For the first six months, revenue was down 1.3% to $7.3 billion, also due to exchange rate fluctuations. Net income from the period was down 1.5% to $523 million, while organic growth was 5.2%. Regionally, North America was up 5.4%, the UK was up 7.2% and Europe was up 3.3%. APAC was up 7.2% and Latin America declined 3.7%. 



Omnicom CEO John Wren said the company’s Q2 generated “strong” results. He touched on some macro-economic issues including Greece, where the company anticipates declines in business, albeit immaterial ones given that it only had about $12 million in revenue from its Greek operations last year. Both Brazil and Russia have hit economic rough patches as well, said Wren, although Brazil should start benefiting from the 2016 Olympics late this year or early next year as marketers jockey for position to exploit the event. 

As to the slew of ongoing media reviews, Wren said there are now more of them ongoing by major advertisers “than I’ve ever seen before.” Wren said Omnicom was about halfway through the review processes it is currently involved with, and noted that it has won SC Johnson, Wells Fargo and Bacardi in the first half of 2015. Those three wins alone have annualized billings of about $1.4 billion. It also recently won Unilever Australia and the CPG giant’s global search business. 

Wren reported that the company has declined to participate in a number of media reviews including 21st Fox, Coca-Cola, Citi, Coty and L’Oreal, given a need to balance new business pursuit with servicing existing clients. 

Omnicom is defending media assignments with billings of $1.2 billion with potential upside of $1 billion assuming successful review outcomes. It’s also pursuing new accounts where the upside is “much greater.” The company is “in a good position to benefit,” he said. The big reviews the company is involved are expected to be wrapped up by October, Wren said. 

As to why all the reviews, Wren said much of it had to do with clients’ “strategic re-evaluation,” given all the changes in technology and platforms (programmatic for example) and the proliferation of new channels and the huge growth of online video. Clients want to make sure they have “the right partners and resources,” he said. “Clients are rethinking their behavior,” given the increased “complexity of the marketplace.” Wren didn’t address the ongoing rebate controversy or its impact on reviews.


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