Lindsay Stein
Jul 25, 2018

IPG raises growth target for 2018 amid strong Q2 results

The holding company's net revenue jumped 5.6% organically in the second quarter.

Michael Roth
Michael Roth

After posting strong second-quarter and half-year results Tuesday, Interpublic Group has raised its growth target for 2018, now expecting to deliver net revenue organic growth of 4 to 4.5% for the full year, rather than 2% to 3% growth.

The holding company reported net revenue up 6.2% and organic net revenue up 5.6% for the second quarter of 2018, with U.S. organic net revenue growing 4.6% and international net revenue up 7.2%.

"The quarter reflects revenue increases across all disciplines, led by exceptional growth in media and at our creatively-led integrated agencies, our digital services, public relations, events and sports marketing," said IPG CEO Michael Roth on this morning’s earnings call. "And the list of contributing agencies is long, most notably Mediabrands, McCann Worldgroup, FCB, Mullen Lowe, Huge, Weber Shandwick, Golin, Octagon and Jack Morton."

In the U.S., IPG’s growth was led by health care, auto and transportation, consumer goods, government and financial services. Internationally, the U.K. posted strong results, growing organically by 14.7%.

For the first half of the year, IPG saw net revenue increase 6% overall and 4.7% organically. The U.S. saw an organic net increase of 4.5% in the first six months of the year, with international markets up 5.1%.

Roth mentioned IPG’s recent acquisition of Acxiom Marketing Solutions several times on call, referring to the deal as "a transformational step for our company that will ultimately impact every part of our organization."

He said the integration of Axciom will put IPG in a strategic position for the next decade of data-driven marketing solutions.

"Together, IPG and Acxiom can go to market as a trusted, high-value partner that can successfully make good on the promise of the convergence of data management and marketing," added Roth.

IPG’s results follow shortly on those of Publicis Groupe and Omnicom Group. Revenue was up 2% to $3.9 billion in the second quarter of 2018 for Omnicom, but revenue in North America, its largest region, was down 0.9% in Q2 to $2.1 billion.

Publicis Groupe saw a drop in organic growth in Q2 by 2.1%—the first decline since Arthur Sadoun took over the company. The drop was accompanied by an 8.3% decrease in revenue from the same period in 2017.

Senior research analyst Brian Wieser of Pivotal Research said in his report Tuesday that IPG delivered above expectations for the quarter. However, he wrote that he and his team "don’t think IPG outperforms the industry in the long-run (even after considering the Acxiom transaction, our long-term expectations are that Publicis and WPP probably grow faster due to a higher share of revenues from media and more exposure outside of the US)."

In the last 18 months, though, IPG has been outgrown by WPP and Publicis one time. 

Source:
Campaign US

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