IPG Reports 1.9% Organic Growth for Q1, Predicts 5-6% Growth for 2021

IPG reported a return to growth in its first quarter following Philippe Krakowsky succeeding Michael Roth as IPG's CEO. In an earnings report issued this morning, IPG reported net revenue of $2.03 billion and organic growth of 1.9% globally for the year's first quarter. "Our strong start to the year reflects the quality of our talent, across the organization, and underscores the successful evolution of our offerings at a time of accelerating, transformational change," Krakowsky said in a statement. "Our ability to create marketing and media solutions that bring together outstanding creativity with the benefits of technology, and an ethical approach to data management, positions us to address higher-order business opportunities." In the U.S., which represents around 65% of IPG's business, the holding company reported an organic revenue decline of 0.2%. Outside the U.S., IPG saw organic growth of 6.3% internationally, growing in every region, including 12.4% organic growth in Continental Europe. The results come as rival WPP also reported growth for Q1. "IPG’s growth is consistent with moderate year-over-year growth we’re seeing across the majority of the agency holding companies," Forrester principal analyst Jay Pattisall told Adweek. "Their U.S. new business performance lagged. If the company can better address U.S. based new business during 2021 this performance should hold or possibly improve." That growth came at a cost, however. "I think the real story here is restructuring," Pattisall said, noting that IPG salaries as a percentage of revenue fell from 72% to 68% and the company's reported 6% decrease in worldwide headcount. "Put another way, part of their performance come form job cuts and severances," he added. Strength in data, healthcare and media During the earnings call, Krakowsky noted that IPG did see domestic growth in the areas of data services, technology and healthcare specialist agencies, the holding company's strongest areas globally. "Two of our most dynamic units were in the media space, where we continue to leverage our deep data resources and capabilities," Krakowsky said. "We are seeing strong growth at Matterkind, which is customizing addressable media activation at scale for more of our clients. At Reprise Commerce, we have rapidly scaled operations on a global basis, as we address growing needs in ecommerce, particularly for insight, content and analytics." Looking to recent highlights from its media operations, Krakowsky cited Initiative promoting Amy Armstrong to global CEO following a series of new business wins, which included T-Mobile appointing Initiative as U.S. media agency of record near the start of the year. "We believe she will have an even greater impact on the network’s success [as global CEO]." Krakowsky also cited UM's recent win of the Enterprise Holdings account and noted that three UM executives earned recognition as Adweek Media All-Stars, along with leaders at Mediahub and Reprise. A look at what's to come Underscoring the role of clients transforming their businesses amid widespread consumer changes, Krakowsky alluded to the challenges of breaking through to consumers, suggesting the importance of leveraging data and insights to inform creative. "In a world that’s more cluttered than ever with messages and channels, all vying for our attention, the most critical challenge is to combine great ideas that come from the human, storytelling side of our business with strategies and insights that can be generated by our technology and data capabilities," he said on the call. He added that IPG has "been developing a data and tech infrastructure that underpins the full portfolio of our agencies, and delivers solutions to a broad range of business problems through our open architecture model," something he said current and prospective clients are seeing the benefits of in the integrated approach. IPG CEO Philippe Krakowsky on Disruption, Data and Privacy IPG saw a 22.6% decrease in direct and office expenses compared to the first quarter of last year, largely due to lower travel and entertainment expenses, as well as real estate restructuring actions taken last year. The uncertainty about future outlook may be tied to what degree such expenses could return over the course of the year, among other decisions. Krakowsky said that IPG agencies may return to offices in September, while adding it would be a gradual return with adaptations along the way. Karkowsky also suggested that better times are to come for the holding company. "To date, we are seeing cautious optimism from clients and the tone of business has firmed in the last few months," he said. "Re-openings, fiscal stimulus and vaccinations programs in a number of our largest markets are providing a tangible lift to economic activity and marketing demand." "Given our strong start to the year, and based on the assumption that there will continue to be a reasonably steady course of public health and global economic recovery, we believe that we can deliver organic growth for the full year in the range of 5% to 6%," he added.