Omnicom PR revenues down 15% in 2009

NEW YORK: Omnicom Group reported $1.07 billion in PR revenues for 2009, a 15% year-over-year decline. The holding company's PR firms include Fleishman-Hillard, Ketchum, Porter Novelli, Kreab Gavin Anderson, Brodeur, and Cone, among others.

NEW YORK: Omnicom Group reported $1.07 billion in PR revenues for 2009, a 15% year-over-year decline. The holding company's PR firms include Fleishman-Hillard, Ketchum, Porter Novelli, Kreab Gavin Anderson, Brodeur, and Cone, among others.

For its fourth quarter, which ended December 31, 2009, the New York-based company said PR revenues fell 8.5%, an improvement over the 15% decline in Q3, and the more than 18% decline in Q2. Total Q4 PR revenues were $277 million.

In comparison, advertising revenues fell 10% for the year to about $5.2 billion.

Companywide, Omnicom's global revenues were $11.7 billion in 2009, a 12% decline from 2008 when it brought in $13.36 billion. Profit fell 21% in 2009 to $793 million.

Omnicom reported Q4 net income of $229.6 million on global revenues of $3.27 billion, a 3% decline in revenues compared to last year's fourth quarter.

In announcing the year-end results today in a webcast, Omnicom CEO John Wren attributed the year-over-year declines to the recession that took hold to decrease client spending.

“These numbers are in line with expectations," Wren said. "This reflects a reduction in annual marketing and advertising spend by clients in the first quarter of the year."

But he also sounded a positive note to investors, declaring the worst behind us.

“As economies improve, we believe the worst of the recession, and its impact, are behind us,” Wren said. “We anticipate many clients will at least modestly increase spending in the second half of this year.”

Analyst Meggan Friedman of William Blair & Co. added that while revenues and net income decreased, the figures were on par with expectations, with some areas faring better than predicted.

“Organic revenue did a lot better than we expected,” she said.

Companywide, organic revenue for 2009 was $1 billion, down about 9% year-over-year.

“I think when we look at organic revenue at the end of 2010, those numbers will have increased over this year,” she added.

In the US, which makes up the bulk of the holding company's earnings, Q4 revenues decreased about 7% to $1.63 billion, while total international revenues increased 1.5% to $1.64 billion.

For the year, domestic revenues were $6.18 billion, a 10% decline from last year's $6.89 billion. International revenues declined 14% to $5.54 billion.

Despite the declines in PR revenues, several agencies within Omnicom said they were doing well financially and had met targets for the year. Ketchum, Fleishman-Hillard, and Cone leadership said that the latter half of 2009, in particular, boosted their numbers.

Ketchum CEO and senior partner Ray Kotcher said in a statement that the agency's revenues were above industry averages, a fact he attributed to new contracts in 2009, including H&R Block and McCormick.

“We had a strong 2009, and we definitely saw an uptick at the end of the year, particularly in new business,” Kotcher told PRWeek.

Cone CEO Jens Bang said contracts with Walt Disney Co., Nestle, the American Cancer Society, and the Boys & Girls Club of America contributed to about 20% organic growth year-over-year.

“We're cautiously optimistic,” Bang said. “We'll be aggressive in new business in 2010; I think you have to be with the economy we're in.”

Fleishman-Hillard CEO and president Dave Senay said the agency's current client base is returning to spending, saying 60% of new business wins came from existing clients last year.

“November and December were actually year-over-year growth months. We are on a growth curve; we're actively filling positions,” Senay said.

None of the executives planned to cut jobs in 2010, though they remain cautious.

“The only thing we're watching out for is if there will be a second downturn in the economy. Other than that, there's very little standing in our way,” said Senay.

Porter Novelli declined to comment.

Updated February 11, 2010, 12:24pm

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