Omnicom PR revenue dips 0.9% in first quarter

It was the second straight quarter in which the holding company's PR firms reported a revenue decrease.

Omnicom CEO John Wren
Omnicom CEO John Wren

NEW YORK: Omnicom Group’s PR revenue in the first quarter of 2016 was down 0.9% organically to $318.8 million (£221.2/€280.2), the holding company said Tuesday morning. It was the second straight quarter in which its PR firms reported an organic revenue decrease.

In the fourth quarter of last year, Omnicom’s PR firms reported an organic revenue drop of 6.9%.

Omnicom’s PR agencies include FleishmanHillard, Ketchum, Porter Novelli, and Marina Maher Communications, among others. In February, the holding company created a PR umbrella group known as Omnicom Public Relations Group and put former Porter Novelli CEO Karen van Bergen in charge of the unit with its agency CEOs reporting to her. Van Bergen is reporting to DAS Group of Companies chairman and CEO Dale Adams. Longtime Porter veteran Brad MacAfee, previously the firm’s North American president, replaced her as the agency’s CEO.

"While PR revenue was down slightly in Q1, we expect to see this rebound as we proceed through the balance of the year and we’re able to leverage the benefits of Omnicom Public Relations Group," said van Bergen, via email. "Our agencies have a number of exciting new business opportunities under way, several coming as a result of the Omnicom Public Relations Group announcement and our commitment to integration; those, coupled with our agencies’ strong record of organic growth and focus on talent, will contribute to our momentum in the coming quarter."

The holding company’s CRM segment also reported an organic revenue decrease in Q1, down 0.7% to $1.1 billion, but advertising, by far its largest earner, was up 7.9% organically in the first quarter to $1.8 billion.

FleishmanHillard president and CEO John Saunders said his firm "incurred a slight revenue decline due to nonrecurring work during Q1 2016, but we enjoyed significant operational improvement during the quarter."

Ketchum CEO Rob Flaherty said his agency had a "strong first quarter, with solid year-over-year growth driven by a mix of new business wins and growth of our work with existing clients."

"We’re energized by the work we are doing in partnership with our clients, and we continue to develop new offerings to help navigate the ever-changing global marketplace," he said, via email. "I’m excited by the possibilities in 2016, and expect this to be a great year for Ketchum across the board."

"A growing number of our clients are looking for integrated, behavior-change campaigns that will have an impact on their business or more broadly, society," said MacAfee, via email. "This expanding work led to solid organic growth during the quarter."

Marina Maher, CEO of the eponymous firm, declined comment.

The holding company as a whole saw revenues of nearly $3.5 billion (£2.4 billion/€3.1 billion) in the first quarter, up 3.8% organically from the year prior. Net income increased 4.4% in the period to $218.4 million (£151.6 million/€191.9 million), while operating income was up 3.8% in the quarter to $392.1 million (£272 million/€344.6), with margins of 11.2%.

Overall revenues were up organically across all regions other than Latin America, including a 4.5% increase in North America to $2.1 billion. U.K. revenues increased 2.2% to $337 million (£233.8 million), while organic growth was 3% in other European markets to $552.7 million (€485.9 million). Asia-Pacific revenues jumped 5.1% organically to $354.3 million, while organic revenue was up 1.7% in Africa and the Middle East to $56.6 million. Latin American revenue was down 7.8% organically to $75.3 million. 

This story was updated on April 19 with additional comment.

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