Omnicom Group Inc. (OMC): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Omnicom posted a healthy beat in earnings for the second quarter of 2014, driven by organic growth across the world. Its well-diversified business mix profited from strong demand in developing nations such as Asia Pacific, Latin America and Africa. Omnicom is focusing on strengthening its business and expanding its client base globally. The increasing demand for media services, speedy growth of technologies and massive proliferation of channels are likely to drive the company's growth, going forward. However, a competitive and fragmented communications services industry is likely to limit the profitability of the company to some extent. Hence, we reiterate our Neutral recommendation on Omnicom.

Overview:

Omnicom is one of the largest advertising, marketing and corporate communications companies in the world. The company's agencies operate in all the major markets across the globe and provide an extensive range of services, which are grouped into four fundamental disciplines: 1) Traditional Media Advertising 2) Customer Relationship Management (CRM) 3) Public Relations (PR) and 4) Specialty Communications. Except for traditional media advertising, the other three disciplines are managed by Diversified Agency Services (DAS), which consists of a global enterprise of more than 100 companies providing services in promotional marketing and specialty communications.

Traditional Media Advertising (50.2% of total revenue in second quarter 2014): The segment includes three of the top ten global advertising brands - BBDO Worldwide, DDB Worldwide, and TBWA Worldwide.

Customer Relationship Management (CRM, 33.5%): The segment includes a range of DAS resources providing clients with CRM services, including sports and event marketing, branding/consultants/design, direct/relationship marketing, promotional marketing, field marketing, non-profit marketing and entertainment marketing.

Public Relations (PR, 9.3%): This group provides services through three of the top seven public relations firms in the world, Fleishman-Hillard, Ketchum Pleon, and Porter Novelli International, as well as specialist agencies including Brodeur Partners, Clark & Weinstock, Kreab Gavin Anderson, and Cone.

Specialty Communications (7.0%): The segment offers its specialty services through an influential global healthcare franchise built by DAS, of which six healthcare communications companies are ranked among the top 25.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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Referenced Stocks: CRM , OMC

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