Omnicom beats analyst expectations in Q2

Strong performance in North America led to another period of organic growth at the holding company.
johnwren

Image: Omnicom CEO John Wren.

Omnicom’s outlook is continuing to improve, posting further organic growth in Q2.

Overall global revenue was down 3.6% year-over-year in the second quarter, which – like last quarter – was attributed to foreign exchange rates and disposition activity exceeding acquisitions over the past year. Organic revenue growth, which excludes those factors, was up 2.8%, with net income up 1.8%. Those results beat estimates from analysts on Wall Street, the fourth consecutive quarter it has done so.

The growth was attributed to particularly strong spending from clients in North America, with organic growth up 3.2% in the U.S. and 11.8% for the rest of North America, which CEO John Wren said “largely consisted of Canada” in an investor call. The only markets where the holding company saw a decrease in Q2 were Latin America (2.4%) and the Middle East and Africa (8.3%), its two smallest markets. According to an investor report, revenue from the U.S. (its biggest market) made up 53.9% of Omnicom’s total revenue, with the rest of North America making up 3%.

Going by service category, organic growth in advertising increased 4.4%, with Wren pointing to equally strong performance in both creative and media. The CRM Consumer Experience discipline increased by 1.9% and Healthcare increased by 8.4%, while CRM Execution & Support (which covers services like field marketing, point-of-sale, sales support and merchandising) decreased 2.6% and PR decreased 1.3%. The advertising and healthcare disciplines have shown increases for three straight quarters, while CRM Execution and Support category has decreased over that same time.

In the investor call, Wren put a great deal of emphasis on the holding company’s ongoing investment in creativity and its agency brands, coming off the second consecutive year being named Holding Company of the Year at Cannes Lions. While he outlined investments that have been made in data and analytics over the last decade, he said they are “tools in pursuit of creativity,” which is the core of what it does and its focus for the future.

“Creativity, which is in our DNA, is bred over time,” he said. “It is not something that can be acquired or sold. We have encouraged our agencies to maintain their unique positioning and go-to-market strategies.”

Some of Omnicom’s agencies in Canada include BBDO, DDB, TBWA, Critical Mass, Hearts & Science, OMD, Touché! and PHD.