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Friday, October 16, 2015
Why Omnicom Is A Solid Dividend Growth Stock - Omnicom Group Inc. (NYSE:OMC) | Seeking Alpha
Why Omnicom Is A Solid Dividend Growth Stock - Omnicom Group Inc. (NYSE:OMC) | Seeking Alpha: "Business Overview
OMC is one of the largest providers of advertising and marketing communication services (it almost merged with Publicis Groupe to become the largest ad agency in the world, but the merger was terminated in May 2014 due to cultural differences and challenging regulatory issues). The company holds more than 1,500 advertising agencies that specialize in over 30 marketing disciplines, grouped into four segments: advertising (50% of sales), customer relationship management (34%), public relations (9%), and specialty communications (7%). A full-service agency provides numerous services, including designing ad campaigns, making the actual ads, determining where the ads should be placed and distributed, media buying, account management, public relations, consulting, and more. Most clients use ad agencies to perform all tasks of a campaign and prefer to conduct most of their business with just one or two agencies to streamline costs and efficiencies.
Today, OMC has more than 5,000 customers located in over 100 countries, although North America still accounts for around 60% of total sales (United Kingdom 10%, Other Europe 16%, Asia 10%, Latin America / Africa 4%). By client and end market, OMC is well diversified. In 2014, its largest client represented 2.6% of revenue, and no other client accounted for more than 2.5% of sales. Its top 100 clients, ranked by revenue, represented about 50% of OMC's total sales. Additionally, no industry makes up more than 13% of OMC's sales. OMC has historically done very well in the food & beverage (13% of sales), pharma & health (11%), consumer products (9%), technology (9%), and auto (8%) markets. According to Advertising Age, some of OMC's biggest customers include Johnson & Johnson (NYSE:JNJ), P&G (NYSE:PG), Unilever (NYSE:UL), Campbell Soup (NYSE:CPB), Hershey (NYSE:HSY), Kellogg (NYSE:K), Kraft (KNC), Mars, PepsiCo (NYSE:PEP), Daimler (OTCPK:DDAIY), GM (NYSE:GM), Nissan (OTCPK:NSANY), and Toyota (NYSE:TM)."
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