IPG Reports Healthy Q2 Performance Despite Losses in US

Revenue has increased compared with last year, and organic growth continues internationally

Headshot of Michael Roth
Michael Roth, CEO of IPG, reported solid second-quarter earnings for the holding company.
IPG

IPG CEO Michael Roth reported “another quarter of solid financial performance” during the holding company’s quarterly earnings call this morning, signaling confidence for the second half of the year despite less-than-stellar organic growth in the U.S. market.

During the second quarter of this year, IPG experienced 3% organic net revenue growth (excluding results from Acxiom, the data marketing firm it bought last July).

Internationally, organic net revenue grew 6.5%, but in the U.S., only 0.6%.

Roth attributed the latter figure to last year’s account losses, including McCann’s loss of the U.S. Army to Omnicom and losing Volkswagen’s creative account in North America to WPP. Late last year, Fiat Chrysler Automobiles sent its North American media business to Publicis Groupe’s Starcom after nearly 10 years with IPG’s UM.

Because of these losses, Roth said that IPG’s second-quarter revenue in the U.S. took a 3.8% hit. Even so, he stated that “organic revenue growth, despite the headwinds faced in the U.S., is an encouraging sign that our clients remain in an investment mode when it comes to their engagements with us.”

Net revenue for the holding company this quarter was $2.13 billion, an increase of 9.1% compared to the same period last year. Much of this can be attributed to the acquisition and growth of Acxiom, which Roth said “remains on track with our expectations, and continues to be accretive to growth and margin.”

As was the case last quarter, management still expects the company to achieve 2% to 3% organic net growth for the year.

For the first half of the year, IPG reported a 4.6% bump in organic net revenue growth (excluding Acxiom) compared to the year prior. According to Roth, IPG is “net new business positive” year to date in both the U.S. and internationally.

“Looking at the quarter and the first half, our performance means that the year is off to a solid start,” Roth said. “Our client-centric integrated offerings continue to drive highly competitive global growth, and the quality of our talent continues to strengthen our offerings.”

Roth spent much of the earnings call touting the company’s wins at this year’s Cannes Lions, noting that IPG took home 11 Grand Prix, more than all other global holding companies combined. He also said that IPG won more gold Lions than any of its competitors.

Yet during the call, Roth found himself on the defensive when pressed to discuss whether the acquisition of Acxiom means IPG now “owns” data. He was quick to state that Acxiom first and foremost specializes in first-party data management, and that only a third of its business involves third-party data.

“I think when people talk about us buying Acxiom and whether there are conflicts, they’re totally misunderstanding the core competency of Acxiom,” he said. “The core competency of Acxiom is being able to target, cleanse and really work with the data the clients have within their own company. The opportunities there are significant. It’s not that we bought data and that we’re selling that data. The core competencies are much bigger than that, and that’s where we see the opportunity.”

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