Omnicom Boosts Income, Revenue

NEW YORK Buoyed by a strong across-the-board performance in the U.S. and overseas, Omnicom Group said today its fourth-quarter net income rose 9 percent to more than $277 million (or $1.62 per share) on a 10 percent revenue boost to $3.2 billion, compared to the same period a year ago.

Full-year 2006 profit climbed nearly 9.5 percent to $865 million (or $4.99 per share) on an 8.5 percent revenue spike to $11.4 billion, compared to the previous 12 months.

“2006 was an excellent year for the group,” said Omnicom CEO John Wren on a call to analysts. “Revenue growth for the quarter and for the year was very strong in all of our markets except for in Japan.” He attributed Japan’s weakness to some client losses.

The agency holding company said its Q4 domestic sales rose 7 percent to nearly $1.7 billion, while its international revenue increased nearly 12.5 percent to $1.5 billion. While CRM and public relations grew more than 10 percent for the quarter and traditional advertising rose 6 percent, specialty services fell 2 percent, the company said.

“From a portfolio perspective, we continue to make investments that reflect shifts in client spending,” Wren said, adding that the company made 16 new acquisitions in 2006 but he expects acquisition growth in the first quarter to be flat.

While Omnicom companies in Germany and Spain performed particularly well for Europe, Wren acknowledged the U.K. and France lagged but still performed better in the fourth quarter than he would have expected a year ago.

He also predicted a surge in client spending in the U.S. in the second half of 2007, referring to past years when a major election was on the horizon.

“Typically, the 18 months preceding an election have classically been very strong for the industry,” Wren said. “I have a suspicion, once you get to the third and fourth quarter, because of the election cycle, the industry will see a positive situation over the course of the next 24 months.”

Pleased with the company’s strides in Asia, Wren said that while China remains Omnicom’s No. 1 priority, the company plans also to expand its capabilities in India.

“We’re very happy with the advertising assets that we have [globally],” Wren said, adding that the communications companies continue to work in a more integrated fashion. “Longer term, they will be completely fully integrated,” he predicted. “In just a couple of years, you won’t be able to tell the difference between what is now called general market advertising and CRM.”

Omnicom is continuing to make investments in measurability of communications’ effectiveness he said, adding, “Anything you can measure, you can get clients to spend money on.”

New York-based Omnicom, with operating units such as BBDO, DDB and OMD, outpaced two of its Paris-based competitors: Publicis Groupe and Havas. The former recently reported a full-year 2006 revenue increase of about 6 percent, while the latter registered an essentially flat performance for the past 12 months.