IPG is getting back to growth as clients invest in more data and technology services.
The holding company posted 11.7% organic net revenue growth in Q4, totaling $2.5 billion. While that was compared to a 5.4% drop in Q4 2020, IPG’s two-year organic increase over 2019 was 5.7%.
For the full year, IPG posted year-over-year organic growth of 11.9% and two-year organic growth of 6.5% to $9.1 billion. Margins continued to expand to 16.8%, up from 13.5% in 2020 and 14% in 2019.
The U.S., which accounted for 61% of IPG’s net revenue in Q4, grew organically by 12%, while the U.K. increased 6.2% organically and Asia Pacific increased 9.7% organically year over year.
IPG is anticipating organic revenue growth of 5% in 2022, consistent with its growth levels before the pandemic and with Omnicom’s projection on Tuesday of 5% to 6% growth in 2022.
Performance has been led by IPG’s data, technology and media offerings, as well as its strategic consulting services in these areas, as clients deal with challenges around online identity and the loss of third-party cookies.
“Services found throughout our portfolio, which call on our more consultative, strategic and specialized capabilities, and are often more technical and higher-value,” CEO Philippe Krakowsky said on an earnings call Thursday morning. “Much of our growth in the quarter and the year was fueled by disciplines and client sectors that most actively tap into our technology layer – data capabilities, analytics and precision marketing.”
Overall, IPG’s I-A-N segment, which includes these services as well as creative agencies, increased 11.2% organically. IPG Dxtra, which includes PR and experiential agencies, grew 15.1% organically in the quarter.
Krakowsky said he sees “significant opportunity for more of our creative agencies and our marketing specialists, such as live events and sports marketing, to be a part of this connected ecosystem” with data and technology.
IPG has paid down the debt on its $2.3 billion acquisition of Acxiom in 2018 and is considering M&A opportunities again, particularly in areas of consumer experience and commerce.
“The rate of change is high, and when you find an asset that brings IP and technology that’s distinctive, it can accelerate the business,” Krakowsky said. “We’ll definitely be looking in those areas in a thoughtful way.”
Krakowsky mentioned that IPG is dealing with salary inflation, a situation many companies are facing as the “Great Resignation” continues. The outlook for 2022 includes “a modest inflationary impact on our investment in employee compensation,” he said, adding that it is “consistent with what I believe we are all seeing be reported across a broad range of industries.”
IPG also said its expenses for temporary labor have increased from a year ago, after the agencies across the sector shed thousands of jobs in 2020 to deal with the immediate financial impacts of the pandemic.
Travel and other expenses remain low but “should begin to return to levels closer to their historic norms” in 2022, Krakowsky said, as the world learns to deal with the pandemic.
“There is a broader recovery going on,” he added. “But there’s also an understanding [from clients] that you have to have a voice in the marketplace given the complexity and speed of what’s going on.”