Omnicom's New Global Media Agency To Launch 'In A Few Weeks'

Omnicom CEO John Wren told analysts and investors Tuesday that the holding company would be launching a third global media agency network within the next few weeks. 

The new shop would join OMD and PHD in the holding company’s stable of global media agency brands. Wren said the new agency would give the company “additional capacity to manage more client relationships.” In the past the company has noted that it has sometimes passed on new business pitches because of conflicts within in its two existing agencies. 

When pressed for details on the company’s fourth-quarter earnings conference call, Wren said the new agency would be structured differently than the existing two networks. It will rely more on hubs that would service multiple markets, thereby reducing the total number of worldwide offices required to build the network. 

Wren said that technology enables the new network to be based on a hub structure. Data and analytics platforms, he said, “are easier to lever over geographies.” 

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Foreign exchange rates continued to negatively impact the company’s revenue growth throughout 2015. The company reported a 1.2% drop in 2015 revenue to $15.1 billion and a decline of 1% in the fourth quarter to $4.15 billion. Wren said the firm would have booked about $1 billion more in revenue during 2015 but for the growing strength of the U.S. dollar. 

Net income also took a hit due to the currency impact. For the full year, net income was down nearly 3% to $1.20 billion. In Q4 net income was down more than 2% to $364.2 million. 

The company’s organic revenue growth (which excludes the impact of acquisitions, divestitures and currency fluctuations), however, remained strong. Full-year organic revenue growth was 5.3% and Q4 organic growth was 4.8%. Advertising and media were the biggest growth drivers for the year while PR and specialty services lagged, according to the company.

In North America, full-year and fourth-quarter organic growth were 5.4% and 4.7%, respectively. The U.K. and APAC regions also remained strong, while Europe was mixed. Latin America continued to lag (with Brazil’s economic woes a leading factor) with an organic revenue decline of 3.3% for the year. 

Looking ahead, Wren said the early expectation is that 2016 will be similar to 2015 from a business performance standpoint. There will be some additional currency disruption, but not as impactful as last year, Wren said. 

The early organic growth expectation for 2016 is 3% to 3.5%. 

Wren said it is too early to tell whether 2016 will produce another flood of competitive media pitches, like the estimated $25 billion in billings that were reviewed last year. “I would not be surprised if the pattern continues,” he said. Whether or not that does occur, he added, “we’ll be ready.”

1 comment about "Omnicom's New Global Media Agency To Launch 'In A Few Weeks'".
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  1. Ed Papazian from Media Dynamics Inc, February 10, 2016 at 2:03 p.m.

    Way to go, John.

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