Advertising agency DDB Worldwide, a unit of
Omnicom Group Inc.
), recently acquired London-based communications agency
'adam&eve' under a 10 million pounds deal. The acquisition
entails expansion of the group's operations in the United Kingdom
creating a new agency, adam&eve/DDB, following the merger of
adam&eve and DDB UK.
Launched in 2008, adam&eve served Cadbury plc and Google
Inc. among its clients with high level of appreciation. On the
other hand, DDB's efforts toward the advertising campaigns of
Volkswagen and Marmite were quite successful.
However, Omnicom unit suffered from recent account losses due to
squeezed client budget toward advertising spending. With this
recent acquisition, the marketing mix and creative exchange among
the two are anticipated to strengthen client confidence while
boosting revenue stream for DDB.
Omnicom believes in strengthening its potential and expanding
client base globally through acquisition of complementary
companies. Omnicom confirmed the acquisitions of Medical Collective
Intelligence, MCI in Japan, &NIM Digital in China during the
first quarter of 2012. Of late, in April 2012, Omnicom acquired a
majority stake in Portland Communications as well. These
acquisition activities are expected to work as a key factor to
augment revenue growth, going forward.
We believe adam&eve/DDB merger will prove effective on the
backdrop of worldwide increase in demand for media services, speedy
growth of technologies and massive proliferation of channels.
Moreover, Omnicom's cost-effective marketing services in the field
of advertising and marketing hold future prospects for the
company's margin management and directly competes with
The Interpublic Group of Companies Inc.
Publicis Groupe SA
We currently maintain a long-term 'Neutral' recommendation on
the stock. The company holds a Zacks #3 Rank, which translates into
a short-term (1-3 months) 'Hold' rating.
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