Omnicom revenues fall 3.6% globally while healthcare props up net income
Omnicom's worldwide revenue in the second quarter of 2019 decreased 3.6% to $3,719.8m from $3,859.6m in the second quarter of 2018. It cited the negative effects of foreign exchange rates and excess payouts for acquisitions over the past year as a reason for the decline.
Healthcare contributes to $6.5m gains for Omnicom in Q2
In positive news, healthcare was again a big driver for Omnicom as the group’s second quarter 2019 results showed an increase of net income of $6.5m, or 1.8%, to $370.7m, up from $364.2m in the second quarter of 2018. The increase appears to be due to organic growth in advertising and healthcare sectors, though worldwide revenue in Q2 decreased in 2019, according to the financial results released by the group today (17 July).
Organic growth increased 8.4% for healthcare, followed by 4.4% for advertising and 1.9% for CRM consumer experience.
John Wren, chief executive at Omnicom, said in an earnings call: "Healthcare continues to be one of our best performing practice areas…Omnicom Health Group…is well positioned for continued growth."
Decreases were also found in CRM execution and support (2.6%) and public relations (1.3%).
Diluted net income per share for Q2 2019 increased 5% to $1.68 per share versus $1.60 for Q2 2018. Analysts had been predicting a $1.61 per share price, so Omnicom exceeded expectations on Wall Street.
Across its regional markets, organic growth in the second quarter of 2019 as compared to the second quarter of 2018 was: 3.2% in the United States, 11.8% for Other North America, 5.7% in the UK, 1.5% for the Euro markets and ‘Other Europe’, and 1.9% for Asia Pacific, while Latin America decreased 2.4% and the Middle East and Africa decreased 8.3%.
The regional US market was up 3.2% with strong results in “advertising and media, healthcare and our Precision Marketing Group,” stated Wren, who added those were offset by declines in events businesses and CRM execution and support.
Focusing on creative
Wren cited the group's commitment to creativity in keeping it strong globally. He went on to say that the group was buoyed by big wins at Cannes for Omnicom agencies DDB, BBDO and TBWA, as well as Omnicom being named the Holding Company of the Year.
Cannes Lions “was the return to celebrating creativity as the most sought-after force in our industry,” Wren said.
He cited data tools Omni and Annalect as key to helping creatives develop better ways of interacting with clients and building out better targeting and analytics for campaigns and brand strategies. But he said a big reason for Omnicom’s growth, and a “true source of differentiation” was the group’s commitment to creatives.
“Omnicom was founded by creatives. It is not something that can be acquired or sold,” he stated.
He noted that at Cannes, all three creative networks placed in the top five of Network Category of the Year, and that Omnicom agencies won over 200 Lions. In addition, he noted how proud the company was that Jeff Goodby and Rich Silverstein, founders of Goodby Silverstein & Partners, honored by Cannes Lions as this year’s recipients of the 2019 Lion of St. Mark Award.
Cannes, he said, was a “recognition for the first time in a long time, that clients realize that the differentiation is the quality of the creative people that you have. He said that consultants and consultancies were all over Cannes two years ago, but that there were “very few of them there this year…They can put in enterprise systems and do fancy things and pretend that they’re in our business but in fact they don’t have any creative assets,” he said of consultancies.
Wren said the constant at Omnicom is creativity. “It’s always been our DNA. We recognize it and really cherish and nurture it.”