Higher advertising spending buoys Omnicom profit

Tue Feb 12, 2013 12:08pm EST
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By Sruthi Ramakrishnan

(Reuters) - Omnicom Group Inc, the largest U.S. advertising company and home to agencies such as BBDO Worldwide and DDB Worldwide, reported a better-than-expected fourth-quarter profit on higher revenue in its domestic market.

Many of the macroeconomic problems cited by advertising companies over the last few quarters, including instability in the euro zone and a slowdown in China, have been easing.

Omnicom said it expects modest growth in 2013 but cautioned that uncertainty in some markets would continue to put pressure on advertising spending.

"While the macroeconomic environment appears to be stabilizing and even improving in some areas, issues in several markets remain unresolved," Chief Executive John Wren said on a conference call with analysts.

"We are cautiously optimistic as we look into the latter part of 2013 and into 2014," he said.

Advertising companies had also been concerned about the impact on advertising spending of the rancorous negotiations over the U.S. fiscal cliff during the fourth quarter.

Omnicom, the first of the major advertising companies to report results, said revenue in the United States rose 5 percent to $2.03 billion during the quarter, accounting for about half of the total revenue.

"Surprisingly strong U.S. organic growth helped buoy continued weakness in Euro markets," Jefferies analyst Will Smith wrote in a note.   Continued...