As expected, Omnicom Group returned to growth in the second quarter, with a 27% gain in year-over-year reported revenue to more than $3.5 billion and organic growth (which strips out M&A and currency impact) of 24.4%.
The double-digit growth reflects the fact that clients started to spend more freely as pandemic restrictions eased in the period.
The company’s advertising division—including media agencies that rebounded sharply—posted organic growth of nearly 30% in Q2. CRM precision marketing was up 25% and commerce and brand consulting was up 53%. The firm’s PR division was up 15% and healthcare—a solid performer during the pandemic—was up 4.5%.
Saying that he was “extremely pleased with our performance in the quarter,” CEO John Wren predicted on an earnings call Tuesday morning that the company would return to sustained “GDP-plus” growth in the future after the global economy has fully recovered from the effects of the pandemic. “I’m not saying it will happen next week,” he said.
That potential future growth, Wren added is more achievable now that the company has disposed of barter media specialist Icon International—a deal that closed in the second quarter. Omnicom owned the business for two decades and for much of that time it was a standout performer. But in recent years while Icon remained a fairly large business (with estimated revenues of $900 million last year), it had stopped growing, Wren said.
As a low margin, no growth business, Wren added, Icon “muted the growth of the rest of the organization.” Omnicom will record a $55.5 million pre-tax gain on the sale of the company. Wren noted that with the Icon sale the company has concluded a program to shed companies no longer in alignment with the company’s long-term growth plans.
And the company expects to make more acquisitions going forward to enhance capabilities in digital transition, commerce, media, healthcare and other services.
Wren also said that he expects Omnicom staffers will return to the office “back in earnest” after Labor Day, with decisions about hybrid models and exact timing left to regional leaders. He said he believed that office work fosters collaboration and ultimately provides an environment that enables staff to provide the “best service to our clients.”
Wren also said he expects agency reviews and other new business activity to pick up in the second half of the year, asserting “we’ll win more than our fair share.”
Net income for the quarter was $348 million versus a net loss of 24.2 million a year ago.
In the U.S., organic growth reached nearly 20%. Growth in other regions: UK, 23.8%; Europe, 34.5%; Asia Pacific, 27.9% and Latin America, 20.8%.