Omnicom Group (OMC) turned in sluggish but in-line Q2 earnings this morning, but CEO John Wren says there is, in fact, an upside to the down economy. Namely: It will allow the world’s largest global ad firm to make some acquisitions on the cheap.
On Omnicom’s Q2 conference call, Wren said economic conditions make it more likely Omnicom will close some deals in the near-term. Why? Financial buyers have left the market, and Omnicom’s ad-industry competitors, namely WPP, IPG and Publicis, have weakened balance sheets from their own acquisition sprees of the past few years. Prices, he says, are coming down.
Side note: Google (GOOG) and Microsoft (MSFT) are still clearly in the market, but Wren didn’t mention them as competitors in the aquisitions he’s considering.
What’s Omnicom shopping for? Wren says digital acquisitions that “fill holes or vacancies in our current capabilities from a geographical standpoint.” OK, not a ton to go on, but since Wren says advertising is shifting quickly from broadcast and print to more measurable online advertising and marketing services, one could expect Omnicom to add businesses where the growth is going.
Otherwise, Omnicom’s business sounds pretty much like it did last quarter: U.S. advertising is weak, with automotive and financial services particularly hobbled. Internationally, Canada, the U.K., Spain, France and Germany are all down, while emerging markets like Eastern Europe, Asia and Latin America are doing better. Organic growth — that is, revenue growth without the impact of acquisitions or currency fluctuation — was 4.3% in the U.S. and 5.3% internationally in Q2.