Omnicom cuts back as it unloads under-performers in Q1

We’ve noted before that the big marcoms companies, unlike their peers in other industries, just seem to get bigger, greedily snapping up any more-or-less related business assiduously.

The pattern still holds, with both WPP and Dentsu acquiring half a dozen or so companies in the first quarter of 2017, but Omnicom may be reversing the trend.

In a Q1 earnings call this week CEO John Wren (below) pointed to the underperformance of various specialist companies in field marketing, events and branding and said the parent was selling some of them, notably specialist print agency Novus which contributes about $10m to Omnicom’s bottom line.

He also pointed to a slowing at programmatic trading desk Accuen (Omnicom’s version of WPP’s Xaxis) noting that that more clients are opting out of programmatic packages for a “fully disclosed” alternative where the firm serves as an agent. Which, strangely enough, is what media agencies are supposed to be.

Overall Omnicon reported organic revenue growth of a healthy 4.4 per cent with revenue up 2.5 per cent to nearly $3.6bn with a 10.7 per cent gain in net income to $241.8m. A change in accounting rules that helped double its profit growth to $23.4m.

US growth was a disappointing one per cent (56 per cent of Omnicom’s business is in the US) but other regions performed more strongly with the UK up eight per cent, in part due to currency movements.

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