NEW YORK: Omnicom Group's PR business provided revenues of about $305 million in the fourth quarter ending December 31, 2008, a 10.2% decrease from last year's same period. PR revenues in the fourth quarter contributed 9% to the holding company's overall earnings. Advertising revenues, which make up the bulk of the holding company's earnings, dropped 7.6% in Q4.
During the earnings call, Omnicom EVP and CFO Randall Weisenburger said PR was “continuing to experience general softness,” a similar comment he made in respect to Q3. For the entire year PR revenues decreased less than half a percent earning about $1.3 billion, while ad revenues grew about 5%.
Omnicom is the industry's largest holding company. Its PR agencies include Brodeur Worldwide, Cone, Fleishman-Hillard, Gavin Anderson & Co, Ketchum, Porter Novelli, and Clark & Weinstock, among others.
Peter Stabler, an advertising analyst at Credit Suisse, called Omnicom's earnings a good barometer for other marketing holding companies such as WPP, whose earnings are due out March 6.
“The PR numbers were bad,” he said, but noted that Omnicom has “cost cut aggressively.” Foreign currency impact will also play a role in differentiating the holding companies.
“I know there's a lot of pricing pressure now,” he added. “It's not just clients cutting back projects, it's clients negotiating more aggressive fees. That's a question mark I have for traditional advertising as well as PR, and all of their businesses… The agencies are caught in a difficult place. They want to preserve their rates, but they also want to preserve their business."
Omnicom's companywide Q4 net income was $271 million on revenues of about $3.37 billion, compared to net income of $314 million and revenues of about $3.6 billion in the same period last year.
For 2008, the company posted revenues of $13.36 billion, earning a net income of $1 billion, an increase of 2.5% from last year.
Omnicom CEO John Wren called Q4 “the most challenging quarter the company has faced since 1992” during the earnings call. He also said that while the company expects to outperform GDP, “the first nine months of this year are going to be difficult” with “some improvement late in the year.”
Updated 12:13pm, February 10