Omnicom Group (US)

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Omnicom is the world's second largest marketing services group, controlling an extensive collection of different businesses led by the global advertising networks of BBDO, DDB and TBWA, three agencies with a reputation unequalled within the industry for consistently excellent creative work, and acclaimed US powerhouse Goodby Silverstein. Its main media buying network is OMD, partnered by PHD. The group also controls a vast collection of marketing services companies including PR giants FleishmanHillard and Ketchum, digital and direct marketer Rapp, digital networks Organic and Critical Mass, branding agency Interbrand, activation agencies Integer and The Marketing Arm and health marketer CDM. An early investor in the internet economy, Omnicom learned several tough financial lessons from the 2001 crash, and since then has almost entirely avoided cumbersome and goodwill-heavy acquisitions. Unlike rivals such as WPP, Publicis or Dentsu, it concentrated on merely filling out gaps in its already broad coverage with highly selective purchases of niche players. Despite the lack of any major acquisitions, Omnicom's overall revenues continued to rise steadily, mainly through organic growth. In July 2013, Omnicom announced plans to merge with rival Publicis to create a new global leader in the marketing services industry. That announcement prompted considerable negative comment within the industry, but was cleared by virtually all competition regulators. However, there was growing disagreement between the rival management teams over the structure of a combined entity, as well as difficulty in securing necessary tax arrangements. After nine months of protracted and distracting negotiations, the merger was called off in 2014. Unlike its French partner, Omnicom bounced back from those negotiations rapidly with a string of key account gains. Under long-serving CEO John Wren, Omnicom had by the end of 2019 a reputation as the industry's best-managed and most sure-footed group. Revenues for 2019 were $15.0bn with net income of $415m. That made the sudden turnaround in performance as a result of the Covid crisis all the more unexpected. After years of steady organic growth unmatched by any of its rivals, it reported some of the industry's biggest declines in revenues in Q2 and Q3. Final year revenues came in at $13.2bn, with net income of $945m.

Capsule checked 11th December 2020

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Omnicom's quarterly organic growth since 2016
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Historical profile information for Omnicom Group

Recent stories from Adbrands Update:

Adbrands Daily Update 14th Jun 2021: Omnicom continues to trim its portfolio to eliminate non-core units. Latest disposal is the corporate barter specialist ICON International, which buys up client companies' unwanted stock - anything from airplanes and real estate to car parts and vitamins - and pays for it with advertising inventory. It's a little known but busy segment of the industry: in 2016, barter was estimated to account for as much as 20% of all US media buys. All the major marketing groups have their own such unit and the largest independent barter agency in the US, Active International, claims to have placed more than $1.7bn in barter-based media bookings in 2020. Omnicom acquired the business in 2003. It is selling to the ICON management team, led by CEO John Kramer. No terms were disclosed.

Marketer Moves 24th May 2021: New CEO for Omnicom PR Group. See Marketer Moves (members only).

Adbrands Daily Update 20th Apr 2021: Omnicom was still stuck in negative territory for organic growth in Q1 2021. Decline for the quarter was -1.8%, with all global regions except Asia suffering further slippage. The key US market was down -1.0%, and the UK fell -6.4% (not just the impact of Covid, not doubt, but the string of account losses at cornerstone AMV BBDO). Mainland Europe fell -3.2%. Another key factor in the overall decline was the slump in revenues from CRM in general and especially experiential. Revenues from the latter - an area in which Omnicom has a particularly strong footprint - slumped by a full third in the quarter as a result of Covid restrictions. Omnicom's results overall are certainly disappointing, especially by comparison with Publicis Groupe's organic bounce back reported last week. However, one mitigating factor for Omnicom is the tough comparison against its own performance in Q1 2020, when the group was still showing modest positive growth (of 0.3%) while Publicis was already deep in the red. Omnicom's reported revenues for Q1 2021 were $3.43bn with net income of $288m.

Adbrands Daily Update 18th Feb 2021: Omnicom reported another period of negative organic growth in 4Q, slightly improved on the previous quarter, but still in the bottom half of the peer table for results to-date. The final quarter came in at -9.6% worldwide, with all regions still negative. The key US market was -9.4%, though Canada and Mexico fared much better at -3.2% combined. The UK fared worse than most other major regions at -12.4%, compared to -9.2% in Europe and -3.9% in Asia Pacific. The full year global decline was -11.1%, with revenues slipping to $13.2bn. All things considered, net income did better than might have been expected at $945m.

Adbrands Daily Update 27th Oct 2020: Omnicom is still taking a worse hit from the Covid pandemic than most rival groups. The organic decline in revenues for 3Q came in at -11.7%. That's a significant improvement on 2Q but still far worse than, for example, Publicis and Interpublic. And the worst of the pain is still coming from key markets like the US at -11.4% and the UK on -12.5%. By comparison, mainland Europe fared a little better at -9.6%. Other global reporting regions all did even worse. Reported revenues for the period were $3.2bn, though net income benefitted from tax gains to rise to $313m.

Adbrands Daily Update 28th Jul 2020: Omnicom's results for 2Q came in significantly worse that expected compared to those from Publicis, released last week. Omnicom suffered a steep fall in organic revenues of -23.0%, the first time for at least a decade that the US group has reported an organic decline. Continental Europe alone plunged by -29.4%, the UK by -23.7% and the US by -20.7%. Reported revenues were $2.80bn, only marginally ahead of the equivalent figure of $2.76bn (€2.3bn) reported by Publicis Groupe. Any further slippage would lose Omnicom its long-held position as the global #2 in marketing. The group reported a net loss for 2Q of $24.2m. Publicis Groupe's results last week (an organic decline of -13.0%) had seemed to suggest that the overall damage in the sector might not be as bad as expected. However, it now appears - perhaps for the first time - that the Groupe's years of complex restructuring have indeed left it in a better position to cope with the impact of the coronavirus pandemic.

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