Omnicom’s Net Income Jumped 24% in Q3

Revenue rose more than 7%

Omnicom Group's organic revenue grew more than 6 percent in the third quarter, as overall revenue climbed more than 7 percent to $3.75 billion.

Net income for the quarter, meanwhile, jumped 24 percent to $243.8 million. The year-earlier period included $28.1 million in pre-tax charges, which were primarily professional fees stemming from Omnicom’s proposed merger with Publicis Groupe that was called off in May.

By discipline, advertising led the way in organic growth, as it rose more than 12 percent for the quarter. In contrast, public relations grew just 2 percent organically, direct marketing operations were up 1 percent, and speciality communications efforts were flat.

Much of Omnicom’s earnings call today with investors centered around its programmatic media buying, which is expected to represent less than 2 percent of the company's overall revenue this year but has great potential.

Omnicom CEO John Wren said that while programmatic buying has just been taking root at the company in the last 18 months, Omnicom is already seeing “meaningful demand” for it from marketers, and the service is being offered in more than 30 markets around the world to 1,000 advertisers. Wren thinks programmatic buying will be at least a double-digit part of Omnicom’s business going forward. He added that he expects the top industry players in programmatic to be Google, Facebook, WPP and Omnicom.

Wren and Phil Angelastro, Omnicom’s new CFO on his first earnings call, also addressed the company’s recently-announced partnerships with Salesforce and Facebook. The Salesforce relationship complements Omnicom’s CRM operations while the Facebook deal yields benefits in people-based marketing, both online and offline, according to Angelastro.

Speaking of the two tech companies, Wren said, “I consider them friends, not enemies, although I’m cognizant every day that can change.”

Regionally, the quarterly revenue growth was driven primarily by North American operations, which grew 10 percent to $1.99 billion. International revenue growth was more modest, rising nearly 5 percent to $1.75 billion.

For the first nine months of the year, revenue grew nearly 6 percent to $11.12 billion, with organic growth exceeding 5 percent.

Wren said that while Omnicom’s agencies are still in the process of ascertaining marketing budgets for their clients next year, he remains cautiously optimistic about his company's prospects in 2015, particularly in the U.S.