Omnicom’s organic growth misses estimates as U.S. clients curb spending

by dying_to_be_vain

As the Reuters’ headline says, Omnicom’s organic growth misses estimates as U.S. clients curb spending.

Omnicom reported a 2 percent rise in organic revenue – a closely watched measure that excludes foreign exchange rate changes and mergers. Analysts, on average, had expected a 2.3 percent rise, according to research firm FactSet. New York-based Omnicom has been able to offset some of its large customer losses in North America with gains in Europe, where organic revenue grew 11.2 percent in the quarter. Organic revenue fell 0.9 percent in North America. In 2017, North America contributed nearly 57 percent to Omnicom’s revenue, while Europe contributed 27 percent.

Not a big drop, but notable that one of the “Big Four” advertising agencies is looking outside of the United States for growth. Europe in particular could be attractive as WPP grapples with the demons in its closet, providing an opportunity for other companies to get former WPP clients.

Or, it could just be that Omnicom’s domestic clients are not seeing as much value in traditional market spend, especially with the rise of nontraditional technology-based advertising competitors.

Omnicom also faces competition from consulting firms such as Accenture (ACN.N), IBM (IBM.N) and Deloitte, which have built big marketing businesses in recent years through acquisitions.

Perhaps its just that these advertising agencies are finding themselves playing catchup to other data-driven advertisers.

Omnicom last week rolled out its data driven marketing and insights platform – Omni, aiming to battle the rise of internet giants Google (GOOGL.O) and Facebook (FB.O), which have transformed the sector by using data to better target advertising.

Competitor Interpublic announced the acquisition of data mining firm Acxiom Corp’s marketing solutions business just two weeks ago.

Either way, lots of interesting news coming out from the top marketing companies, and lots of ways to interpret it. Omnicom trades under ticker symbol OMC, for those interested.

 

For those interested, here are the additional links:

R3 Worldwide Agency Family Tree

Sir Martin Sorrell leaves WPP in a sorry state

Interpublic to buy Acxiom’s marketing solutions division for $2.3 billion

And to add, here’s the Omnicom press release from today:

Omnicom Group Reports Second Quarter and Year-to-Date 2018 Results

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