Oct 22, 2009 at 06:04 PM
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Omnicom: 'Sports & Event Marketing Down 30%'

Global advertising firm Omnicom reported third-quarter profit that fell 23% to $165.6 million on revenue of $2.84 billion for the quarter, a 14% drop. Despite saying client spends have stabilized, Omnicom cited a 30% drop in its sports and event marketing spend. Here's what Omnicom CEO John Wren and CFO Randall J. Weisenburger had to say on yesterday's Q3 call...

  • In the United States, with the exception of several sectors, client spending has stabilized and there are even a few signs of positive growth.

  • Sports and event marketing were also down 30% as clients eliminated discretionary spending for these areas. We are hopeful that as we get into 2010, these areas will start to recover slowly.

  • On the business front, new business activity is improving and our agencies are winning far more pitches than we are losing and at this point, spending levels from our existing clients is best described as generally stable with a few exceptions to the positive, which are mostly in the United States, and a few exceptions to the negative, which are mostly in Europe.

  • Our recruitment marketing business, which we’ve mentioned on the last few earnings calls, was down almost 45% in the quarter and alone accounted for about 1% of our organic revenue decline. [The auto] sector as a whole was down 33% organically, or about $113 million. And our events and sports marketing businesses were down almost 30% organically, and our branding and design businesses were down about 25%.

  • Public relations was down 14.9%, 11.3% of that was organic. And specialty communications was down 19.3, with organic growth down 8.5.

  • We have our challenges with Chrysler, which for 2009 will contribute about 1% of our revenue, so that I believe is at risk. Having said that, we are also engaged in a number of other pitches for other auto makers and we are fully expecting to win our fair share of those pitches.

  • We have increasingly focused and have a -- you know, we’ve always had a pretty robust portfolio of digital assets and there’s been a significant change in the digital capabilities of all of our advertising agencies.

  • A major focus [of acquisitions] is really the Middle East, developing markets, China, India, and sensible digital extensions of our portfolio, sensibly priced digital extensions of our portfolio. Those are our major focuses at the moment.

  • The area of growth which shows the greatest or the fastest recovery is in Asia.

  • We’ll continue to adjust headcount as needed agency by agency based upon their client revenues.

    For the full transcript and others like it, visit www.seekingalpha.com