Omnicom PR revenue up nearly 4% in second quarter

Omnicom Group's PR revenue grew 3.8% organically in the second quarter of 2013 to $336.1 million (£220.5 million), compared with the previous year.

Ketchum CEO Rob Flaherty: 'We continue to contribute positively to Omnicom's top and bottom line'
Ketchum CEO Rob Flaherty: 'We continue to contribute positively to Omnicom's top and bottom line'

PR firms owned and operated by the holding company include FleishmanHillard, Ketchum, Porter Novelli, Cone, Marina Maher Communications, Mercury Public Affairs and Portland.

The rate easily outpaced that of the previous year, when Omnicom reported 0.9% organic growth in the second quarter of 2012 for its PR agencies.

Omnicom's advertising and specialty agencies had stronger periods in Q2, experiencing 4.3% and 7.8% organic revenue growth to $1.8 billion and $285.9 million, respectively. CRM agencies stumbled in Q2, with revenue down 0.5% to $1.3 billion, compared with the prior year.

PR made up 9.2% of Omnicom's business in Q2, with advertising accounting for 48.4%, CRM making up 34.5%, and specialty marketing representing 7.9% of the total.

Randall Weisenburger, Omnicom EVP and CFO, said the holding company's PR firms 'have had a pretty strong new business performance over the past year; spending is picking up.

'Last year, [Omnicom's PR firms] were also doing well, but it wasn't showing up in the numbers, which I'm sure was frustrating,' he said, adding that growth has taken place as the agencies have rapidly expanded their digital capabilities.

For the first half of the year, PR revenue was up 2.9% organically to $654.5 million, compared with the prior year. Omnicom's advertising segment saw 5.1% organic growth to $3.4 billion and specialty marketing reported a 4.5% organic increase to $541.8 million. First-half CRM revenue was down 0.6% to $2.4 billion.

'We are pleased that our growth and new business track record remains strong through the second quarter, and that we continue to contribute positively to Omnicom's top and bottom line,' said Ketchum CEO Rob Flaherty, in a statement. 'In Q2, Ketchum won new business in several highly competitive pitches, including Whirlpool, Avocados from Mexico, Daisy Brand Cottage Cheese, and several others.'

Flaherty also noted that his firm acquired German consultancy Brandzeichen, with other deals in the works.

'We look forward to sharing news of other acquisitions in coming months,' he added.

The holding company saw overall US organic revenue growth of 2.7%, year-over-year, to $1.9 billion in the second quarter. It reported a 3% organic revenue decrease in Euro currency markets to $568.8 million, 7.4% organic growth in the UK to $326.7 million, and 5.2% organic growth in the rest of the world to $837.5 million.

For the first six months of the year, Omnicom's US revenue was up 3.4% organically, compared with the prior year, to $3.7 billion. UK revenue increased 5% organically to $629.9 million, while the holding company saw a 5.2% increase in the rest of the world to $1.6 billion. Revenue from Euro currency markets was down 3.4% to $1.1 billion.

Overall, Omnicom reported a 2.1% increase in worldwide revenue to $3.6 billion in the second quarter. Net income increased 2.4% in the period to $289.5 million, year-over-year. Operating income was up 3.3% to $523 million.

'In Q2, Porter Novelli built on its successful first-quarter performance on the strength of new business wins, including NorthShore University HealthSytem, the State Road and Tollway Authority of Georgia, and NYCxDesign, among others,' Porter CEO Karen van Bergen said in a statement, adding that the firm's quarterly and year-to-date results are contributing to the holding company's growth. 'We expect continued improvement through Q3 through wins such as the US Fund for UNICEF, which we announced today, and anticipate announcing additional wins in the very near future.'

In terms of specific industries, Omnicom reported an 11% decrease in auto-sector revenue, tied largely to the loss of the General Motors' Chevy account, which went to Interpublic Group's McCann in March. Financial services revenue was also down 2.4%. Areas that saw growth included consumer products (7.2%), pharmaceutical (4.5%), and technology (2.8%).

Overall, operating income was up 3% in the first half of 2013 to $894 million, while net income grew 1.5% to $494.7 million.

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