After Organic Revenue Drop in Q4, IPG Expects Growth in 2021

IPG saw its organic net revenue drop in the fourth quarter of 2020, which the holding company said reflects the continued effect of Covid-19 on its various businesses. Even so, its CEO Philippe Krakowsky, who took on the top job at the start of this year, said IPG expects to return to positive organic growth over the course of 2021. The holding company, which owns data marketing company Acxiom as well as agencies including FCB, McCann Worldgroup and UM, posted a 5.4% organic net revenue drop for the fourth quarter of 2020 year-over-year. In the U.S. specifically, organic net revenue fell 1.8%, while it decreased 10.5% internationally. IPG, like advertising’s other holding companies, faced back-to-back revenue hits last year as a result of the pandemic. Last week, Publicis Groupe said its organic revenue fell 3.9% in the fourth quarter. During IPG’s earnings call today, Krakowsky said its experiential companies, which include Jack Morton Worldwide, were hit especially hard in the fourth quarter. “Our events companies in particular, which are typically strong in the fourth quarter, continued to bear the brunt of the health situation, given that restrictions on public gatherings remained in place in most markets around the world,” he explained. Broadening its business Krakowsky spent much of the earnings call pointing to practice areas that fared better during the quarter, as IPG “continued to build positive momentum in disciplines such as media planning and investment,” and clients in the healthcare and retail sectors performed strongly. Specifically, he said Matterkind, a unit within IPG that leverages Acxiom to help clients with addressable advertising, “played a role in several new account wins and client retentions during the back half of last year.” Additionally, he said IPG had a “sizable healthcare win” from an existing client during the fourth quarter that involved bringing together several of its agencies. “The common denominator in each of these examples is our ability to broaden the range of business issues that we can help clients address,” Krakowsky said. “Our goal is to become a more strategic partner, supporting client needs as they seek to derive more value from connecting marketing and technology to power their businesses.” Despite expecting a return to growth for IPG in 2021, Krawosky said “significant uncertainty” remains since “the timing and magnitude of economic recovery clearly hinges on the resolution of the health crisis.” Krakowsky, who succeeded Michael Roth as CEO after serving as chief operating officer, spent some of the call discussing internal changes and priorities. As CEO, he said “doing better when it comes to equity and inclusion” is something he’ll “remain focused on personally” in his new role. In July, IPG released workforce diversity data, revealing that 2.6% of its senior- and executive-level managers are Black and 84.9% are white. IPG is also moving to what Krakowsky called “a hybrid workplace environment, with a reduced need for real estate and an increased role for work-from-home in the delivery of our services.” In its earnings report, IPG said it is shedding leased space in more than 100 locations around the world, totaling about 1.7 million square feet. Ellen Johnson, IPG’s chief financial officer, said the company reduced its real estate footprint by 15% last year. IPG currently employs 50,200 people, which marks a 7.6% decrease from a year ago. Johnson said the workforce cuts are the result of “restructuring, regular severance and attrition, and business dispositions” at the company.