Clients starting to spend again, says Omnicom

11 February 2010

NEW YORK: Omnicom Group, the agency holding company, posted a 12% decline in revenues in 2009, but reported that many clients are now "modestly increasing" their budgets.

For the year as a whole, sales stood at $11.72bn (€8.52bn, £7.5bn), down by 8.7% on a comparable basis, with profits also falling by 21%, to $793m, over the same period.

US totals slipped by 10.3%, to $6.2bn, moderating to a decrease of 9.7% in organic terms, the New York-based firm said in a statement.

The Eurozone was off by 14.6%, to $2.5bn, or by 10.6% like-for-like, figures that stood at 21.1% and 6.5% for the UK, on $1.0bn overall.

More positively, trading conditions improved in each of these areas in the final quarter, when revenues came in at $3.4bn.

"I think cost containment is still a pretty high priority, at least from what I've heard from clients," said John Wren, chief executive of Omnicom.

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

Food and beverage firms delivered 16% of Omnicom's returns in 2009, with pharma and healthcare on 13%, and consumer products and automotive both on 11%.

The proportion of revenues generated by the last of these categories diminished by 3% compared with 2008, with most other sectors largely static.

"One positive sign which we're seeing at least domestically in the United States is the auto sector I believe is spending more money," Wren continued.

"Most likely it's a war for market share which is going on right now and I think that war will continue well into the first half."

"Other industries, in general I'd have to say that clients are looking at their budgets and where there is an ROI, they're modestly increasing those budgets as we go into this year."

Advertising was revealed to be the most valuable discipline for the company over the last 12 months, accounting for 44% of revenues, while CRM on 37%, and its PR and "speciality" arms both on 9%.

Data sourced from Omnicom; additional content by Warc staff