Interpublic Group hits revenue targets despite headwinds

Chris Pash
By Chris Pash | 23 October 2019
 
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The Interpublic Group weathered headwinds caused by account losses last year to hit its third quarter revenue target.

Net revenue rose 8.7% to $US2.06 billion in the three months to September.

Organic net revenue -- a widely used metric in advertising which excludes results from recent purchases and currrency fluctuations --  was up 1.4% compared to the same quarter last year.

That brought organic growth for the first nine months of the year to 3.5%. 

The third quarter result compares well to other advertising companies, with postive 2.2% organic growth for Omnicom and a negative 2.7% for Publicis Groupe

In New York, IPG shares rose 3.3% to $US21.50. 

Interpublic Group CEO Michael Roth says his company is performing "ahead of industry norms" and is on track to hit the high end of the 2019 target of 2% to 3% organic net revenue growth.

"This result includes underlying growth across many of our US agencies and disciplines, but as expected, also reflects headwinds from the account activity towards the end of last year," he says.

"These losses year-over-year resulted in the US headwind of 4.8% in the quarter.

"Overall our performance, taking into account the headwinds and industry leading comes from last year, along with positive net new business this year, demonstrates that our business remains highly competitive and on the right track."

Growth was led by media, healthcare marketing, public relations and sports & entertainment offerings.

"We saw contributions from a broad range of client sectors, including healthcare, financial services, retail, tech and telecom, and consumer goods," says Roth.

"Regionally, international markets led our growth, while in the US we are working our way through the impact of certain account-specific headwinds."

In Asia-Pacific organic growth fell 0.5%. IPG reported "solid" growth in Japan and India but that was offset by "soft" results in China and Australia. 

"In our Integrated Agency Network, Mediabrands led our growth in the quarter, posting a very strong performance," sasy Roth.

Media agency UM continued to grow in the third quarter, retaining CVS and Aetna health. The agency also won the Levi's America media account, supported by FCB West, the client's existing creative agency.

Roth says Acxiom, a database marketing and data business which IPG bought for $US2.3 billion in 2018, continues to expand its role with clients and agencies.

"Acxiom designs and runs the data infrastructure for many of the world's most sophisticated marketers," he says.

"The scale at which they operate handling billions of client records safely and getting the most value from them in ways that are respectful of the consumer gives clients comfort that they are working with a company that has deep expertise in data management, ethics and privacy." 

IPG's third quarter 2019 numbers:

ipg 3rd q 2019

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