Omnicom Q3: Old-School U.S. Agencies Are Biggest Earners

There are two interesting things in Omnicom's Q3 2009 earnings results, out today: How much worse OMC's non-advertising disciplines are doing compared to its ad agency businesses (such as BBDO and DDB); and how much worse the U.K. is doing compared to the U.S. The following charts from Omnicom's investor presentation tell the story:

Revenue from its advertising segment was down 11.6 percent whereas customer relations management was down 16.2 percent. U.S. revenues declined 13.2 percent whereas U.K. sales were down 22.1 percent.

The numbers are counterintuitive because businesses such as CRM are supposed to be so thoroughly built-in to the clients -- via call-centers, coupon-user lists, and what-not -- that it is difficult for clients to reduce the money they spend operating them. That is why agency holding companies have made big moves into below-the-line services over the last 15 years (in fact a majority of OMC's revenues come from non-traditional marketing services).

That PR is down further than advertising is also interesting because PR is supposed to be magnitudes better value for money than advertising. Any PR account worth more than $5 million in billings is considered huge. Ad accounts can blast all the way into the hundreds of millions. At large clients, cutting the PR budget is unlikely to produce meaningful savings -- and yet cut they have.

In terms of geography, the U.S. seems to be suffering less than Europe and Britain. That's unexpected because the mortgage market which tanked the economy was supposed to be more damaged in the U.S. than the U.K. (although anyone familiar with the London housing market might beg to differ).

The takeaway: Two cheers for Mad Men style agencies in New York and Los Angeles. They're keeping the ship afloat.

The bottom line: Overall, it's still mostly negative news for Omnicom: Total revenues were $2.8 billion, down 14.4 percent. Net income was $166 million, down 22 percent.