2. Company Overview

3. Company Overview Formed in 1986 78,500 employees 5000+ clients
Biggest 100 clients provide 50% of revenue
No client comprises more than 3% of revenue
US comprises 56% of revenue
Advertising 53% of revenue, CRM 31%, PR 9%, Specialty Communications 7%

4. Company Overview 2016 revenue $15.4bn, net profit $1.2bn
Oligopoly of 6. Big players are WPP, Omnicom and Publicis. Secondary players are Interpublic, Havas and Denstu

5. Why Do Companies Need Advertising?

6. Why Advertising Agencies Will Endure
Advertising is an industry of talent
Advertising needs are diverse
Ad buying offers a volume discount

7. Why is Advertising a Very Good Business To Be In?

8. Characteristics of Advertising Industry
Loyal customers
Competition is rarely price-based
Customers pay before work is done
Cyclical
Staff share in success and failure

9. How financially stable is the company?

10. 10 year financial profit margins

11. What’s Management Like?

12. Management CEO John Wren
CEO for 20 years, with the company for 28 years
Last year’s pay c. $20m
Owns $80m in Omnicom stock
Martin Sorrel pay £48m (cut from £70m)

13. How Does Omnicom Use Its Profits?

14. Capital Allocation Doesn’t make large acquisitions
2016 use of cash: 10% capital expenditures, 32% dividends, 27% acquisitions, 30% buybacks
$234m stock buyback in first 3 months of 2017

15. Risks

16. Risks Not enough invested in digital
Will digital erode volume advantage?
Has Amazon changed advertising?
CEO is 67

17. Opportunities

18. Opportunities
Cyclical low on advertising spending
Tax rate reductions

19. Stock Price History

20. Valuation $18.8bn market capitalization $22.2bn enterprise value
$1.25bn consolidated income
17.7x Profit to Enterprise Value
10%+ return predicted