New-Business Wins Lift Omnicom Second-Quarter Profit

Holding Company Sees Recovery Across the Globe, but Some European Markets Still Struggling

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NEW YORK (AdAge.com) -- Omnicom Group saw second-quarter profit grow 4.2% to $243.3 million from $233.4 million in the same period last year, the U.S.-based company announced today.

Worldwide revenue increased 5.9% in the quarter to $3.04 billion, and, of that, domestic revenue accounted for $1.64 billion and international revenue $1.4 billion. For the first half of the year, Omnicom's net income increased 2.2% to $406.7 million from $397.9 million in the same period in 2009, while global revenue for the first half were up 6.1% to $5.96 billion.

The improved performance was attributed to new-business wins from the likes of General Motors (Chevrolet), Humana and Kraft, as well as easier comparisons to 2009, when the economy battered Madison Avenue. Among the disciplines that saw increased revenue in the quarter were Omnicom's events and sports-marketing business -- which benefited from the FIFA World Cup -- as well as public relations and customer-relations marketing.

On a conference call with analysts this morning, Omnicom CEO John Wren observed that discussions with clients midway through 2010 are now less about cost-cutting and more about opportunities for growth. "Clients are now turning towards the top line," he said. He added that, when it comes to fee negotiations with clients, "there's still pressure to be extremely productive and efficient" and that those talks revolve around agencies being asked to carry out an expanded scope-of-work.

Omnicom -- which is the parent of global networks like BBDO Worldwide and TBWA Worldwide, and domestic agencies such as Goodby Silverstein & Partners and GSDM Idea City -- reported increasing stability across all markets. It did, however, note that Europe remains a mixed picture; the U.K., France, Netherlands and Belgium are doing well, but other markets such as Greece, Ireland, Spain, Portugal and the Czech Republic were identified as "struggling."

"We'll continue to focus on expanding our digital capabilities," Mr. Wren said on the call, a nod to the company's recent alliance with search giant Google, under which it is committing to spending millions on display ads in exchange for tech services.

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