IPG enjoyed a powerful 2019 with organic revenue expected to be greater than any other holding company at 3.3 percent.
This amounts to net revenue of $8.63 billion, compared to $8.03 billion in 2018. This was comprised of an organic net revenue increase of 1.9 percent in the U.S. and 5.5 percent internationally.
During its full year and fourth quarter conference call, which included IPG CFO Ellen Johnson’s debut, Chairman and CEO Michael Roth said the network’s top performing client sectors were tech and telecom, health care, retail, financial services, and food and beverage. Every client sector grew last year, other than Auto where "we were contending with headwinds."
IPG has set a new organic revenue growth target for 2020 of three percent and forecast margin expansion. Roth explained that while feelings going into the new year are strong, there are some "wildcards." He noted that a question mark hangs over what sort of impact the coronavirus will have on the supply-chain side of IPG's operations. This region, however, accounts for only two percent of the holding company's overall business.
Meanwhile, IPG underscored that new business prospects should cover what was lost by the Bank of America move from Hill Holliday to Publicis Groupe following its consolidation play. It closed the door on a decades-long relationship.
Roth said: "Our results for the year further demonstrate the strength of our client centric integrated offerings and the quality of our people, a combination that has produced leading organic growth and margin improvement over a period of many years. We are proud of our consistent level of achievement amid significant change in our industry and the dynamic environment in which we are all operating.
"Along with strong performance, we have continued our investments in outstanding talent across our agencies, and in the tools and capabilities that keep us on the leading edge of our industry. This is especially true in key areas like digital, data services and analytics, strategy and creative."
Fourth quarter 2019 net revenue was $2.43 billion, compared to $2.41 billion in 2018, with an organic net revenue increase of 2.9 percent compared to the prior-year period. This was comprised of an organic net revenue increase of 2.1 percent in the U.S. and 4.1 percent internationally. Fourth quarter 2019 total revenue was $2.90 billion compared to $2.86 billion in 2018.
During the fourth quarter of 2019, office and other direct expenses were $419.7 million, an increase of 10.2 percent compared to the same period in 2018. For the full year 2019, office and other direct expenses were $1.56 billion, an increase of 15.4 percent compared to 2018. The sharp uptick in this area was mainly due to the inclusion of Acxiom for the full year, which has a higher ratio of office and other direct expenses as a percentage of its net revenue, primarily driven by client service costs and professional fees.
Meadiabrands closed the year with very strong performances. UM retained its relationship with GoPro and added Armor All, recently acquired by existing client Energizer.
Meanwhile, FCB grew in Q4, driven by success in its Health operations. McCann saw global growth. MullenLowe Group closed the year with a number of new business wins, including being named a global agency partner for Bayer. In the U.S., TaxAct and the Avis Budget Group were both added to MullenLowe’s roster.
Acxiom continues to expand its role with clients and IPG's agencies. Roth said the data and tech solution have a seat at the table, adding more value to clients than ever before.
Johnson noted IPG had another strong quarter in the U.K., with four percent organic growth -- that’s on top of 9.6 percent growth in Q4 2018. IPG Mediabrands, Jack Morton and Huge led the charge for this success. For the full year, U.K. organic growth was 3.7 percent, a solid increase against 9.7 percent growth in 2018.
In Europe, organic growth was 6.2 percent. This was highlighted by increases in most of IPG’s largest national markets, namely Spain, Germany, and France. Johnson said Q4 caps an "outstanding year of 7.3 percent organic growth on the Continent."
Latam grew by 17.1 percent in Q4.
Meanwhile, organic revenue for the APAC region slid -3.0 percent. Roth said IPG’s primary concern for the region is the safety and wellbeing of those affected by the coronavirus.
He said: "As we turn to our outlook for 2020, our first thoughts are ones of concern and support for our people, clients, and partners in China, and for everyone around the world contending with the coronavirus outbreak. We are closely monitoring the situation and are focused on the well-being and safety of our people, and are taking appropriate steps to protect them during this difficult period."
Roth concluded: "We are pleased to have achieved strong results for 2019, highlighted by organic revenue growth that once again leads the sector. In each of the past five years, our growth rate has topped the industry average. This continued outperformance speaks to our talent, offerings and our differentiated holding company model.
"For some time, we’ve seen our key role as supporting and nurturing strong agency brands so they can continue to produce great advertising for our clients. Simultaneously, we have never lost sight of the evolving landscape and the disruption taking place in marketing, media and communications.
"To address these challenges, we have invested in key areas to create an IPG that is positioned for the future. These have included embedded digital expertise across the portfolio, leading-edge media and data capabilities, and open architecture solutions. All of which have helped us build a future-facing company."
Roth ended by praising the success IPG's agencies had at the Campaign US Agency of the Year Awards.