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Morningstar | Omnicom Delivers Solid Profit Growth by Combining Organic Growth With Intelligent Acquisitions

Omnicom is the second-largest player (based on annual revenue) within the advertising space. Compared with its peers, the firm has attained that position less through acquisitions and more through organic growth. With very well-recognized creative agencies and sub holding companies such as BBDO and DDB, we expect Omnicom to maintain its market position as it generates competitive organic growth, continues to make acquisitions, and increases focus on the faster-growing emerging markets and the overall digital ad markets.Through various acquisitions, the firm has transitioned from traditional advertising toward becoming a complete solution provider with digital (including online video, social media, and mobile), along with other services such as public relations. Compared with its peers, Omnicom has been relatively quiet on the acquisition front since it ended merger talks with Publicis in 2014. However, top-line growth has been in line with the other ad-holding firms.We look to Omnicom to pick up the pace of its acquisition growth strategy to gain further traction in other faster-growing international markets, as globalization of businesses in various verticals has increased demand not only for vertical-specific advertising expertise, but also for experience, knowledge, and a clearer understanding of different cultures and regulations.We also expect Omnicom to continue acquiring and to invest in the growing digital advertising space. Clients of Omnicom and its peers are allocating more ad dollars toward below-the-line, or more targeted, digital campaigns, creating growth opportunities. Like its peers, Omnicom has made headway in providing different components of digital advertising such as programmatic media buying and ad placement, along with data analytics and performance-measurement services.