Omnicom Crafts New Web - Analyst Blog

Digital marketing agency of Omnicom Group Inc. (OMC), Critical Mass, introduced an integrated new web brand experience for Theodore Alexander, a renowned craftsman. Omnicom launched a new website with an updated logo and corporate color palette for Alexander's luxury brand. This new agreement adds another client to the basket.

Omnicom's key growth strategy is to enhance its client's base, which is its major focus. Further, Omnicom also has a strategy to acquire complementary companies with strong entrepreneurial management teams to expand its client base. Moreover, markets are picking up and the improving economic conditions should benefit Omnicom as they help increase consumer spending.

Omnicom is also expected to benefit in the long run because of improved coordination between the diverse advertising and marketing strategies of its global customers, which should augment cross-selling opportunities across its businesses.

However, this huge dependence on clients is risky as the loss of a client or reduction in client spending could adversely affect the company's results. An intensely competitive advertising environment and pricing pressures remain causes of concern.

Omnicom's direct competitors are Interpublic Group of Companies Inc. (IPG) and WPP plc (WPPGY). However, management remains committed to expanding its business and relationships in Asia, where operating conditions remain extremely favorable. This should improve the long-term profitability of the company.

We are optimistic about the fourth quarter of fiscal 2010 results, which are expected to be released on February 7, based on strong results during the third quarter of fiscal 2010. Omnicom reported a 6.7% organic revenue growth and an EPS of 57 cents, which also met the Zacks Consensus Estimate.

We continue to rate the stock as Neutral' in the long term. The stock's short-term rating also remains ‘Hold' with a Zacks #3 Rank.

 
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