Omnicom Stock Hits One-Year High as IPG Sell-Off Progresses, Net Income Nearly Doubles
Omnicom's Q2 net income rose to $585 million from $258 million a year earlier, and total revenue reached $6.6 billion, close to Omnicom and IPG's combined revenue from the same period last year. Shares climbed to a one-year high on Wednesday morning as investors weighed those numbers against CFO Phil Angelastro's disclosure that advertising revenue fell by low single digits. Integrated media, health, PR and experiential, the last lifted by World Cup activity, all grew. Omnicom is roughly halfway through selling off lower-growth IPG agencies and closing overlapping offices, and CEO John Wren told analysts the combined firm is 'more of an operating company than a holding company,' coordinating agency segments from a single center.
Overlapping specialist shops and country offices are closing as Omnicom finishes folding IPG into its network, so clients working with those units should expect account teams to consolidate over the coming quarters. Principal media keeps expanding too: third-party service costs, the line where Omnicom books that revenue, jumped $604 million to $1.5 billion in the quarter, versus a $107 million increase a year earlier. Under principal media, an agency buys inventory directly and resells it to clients at a markup, and neither Omnicom nor Publicis breaks out how much of that cost sits inside client budgets. Marketers should ask account teams directly what share of their spend runs through principal deals versus open, disclosed buys.