Tags: Omnicom | strengthens | diversification | OMC

Omnicom Strengthens on Diversification

By    |   Monday, 21 Nov 2011 05:09 PM

In the quickly changing world of media and communications, the key is to be faster and smarter. For Omnicom (OMC), one of the world’s largest advertising firms, diversification in developed and in emerging markets across a wide range of industries has kept the company growing.

During OMC’s recent third quarter earnings call in mid-October, the company assured investors that it was bringing in higher revenues, beating out analyst expectations for the past four quarters but also with higher net incomes the past three quarters. The company is also on course to achieve its goal of returning to 2007 margins by 2012.

Company executives believe that, despite the suffering global economy, the major companies who are its clients are even more focused on ensuring brand differentiation between themselves and their competitors, meaning more business for OMC’s global agencies.

In turn, the company is investing in its talent, both locally and globally, to give its customers what they need to succeed in these hard times.

New York-based Omnicom has succeeded in diversifying its markets to the extent that its third quarter revenues were almost evenly split between U.S. and international. Nearly every market in both developed and emerging economies saw growth except for Japan and Greece, with many in the Middle East and Asia showing double-digit growth.

Asian focus

Though Omnicom remains dedicated to its U.S. and European clients, where growth continues and its future outlook remains strong, the company is investing more in emerging markets. In late October, after third quarter reporting, it announced the acquisition of a majority stake in key Indian partner Mudra Group.

Omnicom’s DBB Global already owned a 10 percent stake in Mudra Group, which includes several of the top agencies in the country. The closer relationship is expected to boost Omnicom’s participation in the Indian market and close the gap with competitors WPP (WPPGY), IPG (IPG) and Publicis (PUB).

As of the third quarter, Asia and Latin America represent 22 percent of OMC’s revenues, up from 18.5 percent this time last year. As it continues to grow its presence through acquisitions and alliances with key partners in emerging markets, that revenue share can be expected to grow.

Deutsche Bank reaffirmed its buy rating on Omnicom after the Oct. 18 earnings call along with Citigroup, where analysts raised the price target to $48 from $46.

OMC next reports around Jan. 17.

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In the quickly changing world of media and communications, the key is to be faster and smarter. For Omnicom (OMC), one of the world s largest advertising firms, diversification in developed and in emerging markets across a wide range of industries has kept the company...
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2011-09-21
Monday, 21 Nov 2011 05:09 PM
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