Omnicom Group (OMC)
Q4 2011 Earnings Call
February 14, 2012 8:30 am ET
Randall J. Weisenburger - Chief Financial Officer and Executive Vice President
John Wren - Chief Executive Officer, President and Director
James Dix - Wedbush Securities Inc., Research Division
John Janedis - UBS Investment Bank, Research Division
Alexia S. Quadrani - JP Morgan Chase & Co, Research Division
Tim Nollen - Macquarie Research
Anthony J. DiClemente - Barclays Capital, Research Division
David Bank - RBC Capital Markets, LLC, Research Division
Michael Nathanson - Nomura Securities Co. Ltd., Research Division
Daniel Salmon - BMO Capital Markets U.S.
Previous Statements by OMC
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Randall J. Weisenburger
Good morning. Thank you for taking the time to listen to our fourth quarter 2011 earnings call. We hope everyone's had a chance to review our earnings release. We've posted to our website both the press release and the presentation covering the information that we'll be presenting this morning. This call is also being simulcast and will be archived on our website.
But before we start, I've been asked to remind everyone to read the forward-looking statements and other information that's included on Page 1 of our Investor Presentation and to point out that certain of the statements made today may constitute forward-looking statements and that these statements are of present expectations and actual events or results may differ materially.
I'd also like to remind you that during the course of the call, we will discuss some non-GAAP measures in talking about Omnicom's performance. You can find a reconciliation of those measures to the nearest comparable GAAP measures in the presentation materials.
We're going to begin the call with some brief remarks from John Wren. And following John's remarks, we'll review our financial information for the quarter, and then both John and I will be happy to take questions.
Good morning. I'm pleased to speak to you this morning about our latest business results, the progress we've made in 2011 against our key strategic initiatives and my thoughts for 2012.
Thanks to an exceptional list of clients and the commitments, talent and creativity of our people, we have generated very strong results throughout 2011, and we end the year extremely well positioned for future growth. We recognize the global economy is operating in 3 speeds. As the European downturn continues to unfold, it's impact, for now, is limited to Europe. Despite these problems, we continue to see significant opportunities for growth.
Amidst the uncertainty, we continue to focus on the things we, at Omnicom, can control. First, let me speak about the fourth quarter in 2011. Organic growth in the fourth quarter was up 5.2%. This reflected strong performance even in the face of difficult year-over-year comps. Our fourth quarter was driven by strong results across both disciplines and markets with the notable exception of euro markets, where growth was negative for the quarter. For the full year, organic growth was 6.1%.
In the quarter, we continue to expand our presence in key emerging markets. We announced the acquisition of a majority stake in the Mudra group, one of India's leading integrated marketing communication companies, and we completed transactions in Turkey and South Africa. These transactions helped us build our capabilities and expand our base of talent in these key markets.
During 2011, we also accelerated our investments in digital, social, mobile and analytics across the networks. We continue to pursue a multipronged strategy built around the core idea that all of our agencies must have strong digital capabilities to compete in the future. As a result, we are helping in pushing our agencies, where needed, to continue to accelerate the expansion of their digital expertise. We're also consolidating our expertise and knowledge in technology where appropriate.
Finally, we have acquired new capabilities to complement our existing skill sets. These investments are helping us to deliver innovative and integrated solutions for our clients and to expand our business into new areas. As one example of this integration, I'd like to highlight the Bringing Happiness Home campaign we just did for PepsiCo in China for the Chinese new year. It featured 3 of PepsiCo's strongest brands, Pepsi, Lay's and Tropicana, and was delivered on TV, online, in the store and at a home. Two weeks into the campaign, the results have been outstanding. The 10-minute mini movie at the center of the campaign has become China's #1 online video and has been viewed more than 100 million times. That is what you call earned media.
Our agencies remain focused on delivering value for our clients and in promoting strong cultures built around talented and creative people who help us win in the market every day. You've all heard me say this before, in the battle between culture and strategy, culture eats strategy for breakfast every time.
Driven by their creative cultures, Omnicom's agencies, together with their clients, were recognized around the world for their work in 2011. While I can't mention all of the awards, I'd like to highlight a few. BBDO and DDB finished #1 and #2 in the Gunn Report's 2011 Most Awarded Agency Networks in the World. It was BBDO's sixth consecutive first-place finish and DDB's third consecutive second-place finish. BBDO was named 2011 Global Agency of the Year by both Adweek and Campaign magazines, and for the fifth year in a row, BBDO topped The Big Won. OMG was named Global Media Agency of the Year by Adweek and Media Agency of the Year by Ad Age. TBWA Hakuhodo was named 2011 International Agency of the Year by Ad Age. Ketchum was awarded the International Consultancy of the Year honor by PRWeek, and LatinWorks was named Ad Agency (sic) [Ad Age] Multicultural Agency of the Year. I want to personally congratulate all of our agencies for their outstanding work in 2011.