The stock has corrected by more than 14% after the earnings. The earnings were good as strong digital spending and good growth in emerging markets helped growth in revenues and net income. The operating margins also expanded slightly. As per a recent article on seekingalpha, Omnicom is likely to benefit from the rising demand for digital marketing. The merger with Publicis will help it become a leading media and communication company in the world, and, more importantly, it will enhances its digital capabilities. This is extremely important for the company to adapt to changing times and serve its customers better. The focus on emerging markets will help it achieve higher growth. As per the author, expansion in Asian and Latin American countries will help the company improve its EPS by around 7.3% to $3.86 per share this year and $4.27 next year. The company has done well over the years with steady growth, and is expected to do better after the merger. Though there are other voices which say that the merged entity will lose some big clients because the two companies service rival companies. For example, Omnicom serves PepsiCo (PEP), AT&T (T), and Microsoft (MSFT), while Publicis serves Coca-Cola (KO), Verizon (VZ), and Google (GOOG). The exact impact of these aspects can only be known later. Advertising industry has a fast changing landscape, and online advertising is gaining importance. Native advertising / social media sponsorship is also becoming a preferred method to influence customers. IZEA (IZEA) a company in this space recently posted record numbers. The merger will help the company gain access and insights about other segments of the market so that it can alter its strategy accordingly. The synergies may help enhance the competitive advantage. This may translate into faster growth in revenues and net income.
