IPG revenue dragged down by cautious tech ad spend

Chris Pash
By Chris Pash | 23 October 2023
Credit: Tungsten Rising via Unsplash

IPG’s reported a 0.4% fall in organic revenue growth for the September quarter, weighed down by cautious technology clients and marketers concerned about dark economic winds.

The result was stark compared to an organic increase of 5.6% during the third quarter of 2022.

Net revenue was $2.31 billion in this September quarter. The US recorded organic change of -1.2%. Asia-Pacific was -5% and the UK a positive 2.2%.

Over the the first nine months of the year, IPG organic revenue fell 0.8%, a long way from the global advertising company's trailing three-year growth of 15.7%.

IPG's global peers have so far reported better results. Omnicom last week posted "strong" organic revenue growth of 3.3% in the September quarter. Publicis reported organic growth up 5.3% and Havas 4.5%

“Revenue performance did not measure up to expectations,” says IPG CEO Philippe Krakowsky.

“Yet we continued to demonstrate disciplined management of the business and to see positive contributions to growth from our media offerings, the health care sector, sports and experiential marketing, and public relations.

“Factors that we have identified since the early part of the year continued to weigh on our growth in the quarter.

“These include the decreases in client activity in the tech and telecom client sector that have been evident across our industry, and the performance of certain of our digital specialists.

“Another factor impacting results is increased concern among marketers related to macroeconomic conditions, which led to the delay of projects and sales cycles, as well as slower-than-anticipated onboarding of some new business.

“Given the evolving business climate and our portfolio of clients and capabilities, as we look at the remainder of the year, we believe organic growth in the fourth quarter will be approximately 1%.

“Concurrently, we remain fully on track to deliver our margin goal for the year of 16.7%, which is unchanged, and represents margin expansion relative to 2022.

“We are focused on closing the year as strongly as possible and, specific to areas of underperformance, will simultaneously assess internal structural solutions in order to improve our growth profile.

“We continue to be in-market with compelling offerings that help marketers grow and deliver business outcomes. This has translated to strong new business success for us year-to-date, and which will provide some tailwinds as we move into 2024.

"An additional area of value creation is our long-standing commitment to capital returns, which remains an important priority for us going forward.”

A slide from IPG's results presentation:

IPG sept q 2023


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