Interpublic Posts 6.6% Organic Growth In Q1

The mega merger between Omnicom and Publicis Groupe isn't keeping executives at rival agency Interpublic Group up at night, according to Michael Roth, Interpublic's Chairman and CEO, as the company released its first quarter earnings results.

"We [would be] competing with the same players we competed against before," says Roth. "We are all relatively same size, and we compete very effectively against those organizations. We will have a seat at the table because we offer more customized offerings in buying and planning."

Still, Publicis and Omnicom aren't the only ones seeking resolution with this proposed and long-delayed merger. "At this point, I don't think there are any specific clients at play," says Roth. "But the potential merger does create uncertainty. We haven't seen huge transformations. Clients are waiting to see what happens, the same as everyone. But the true impact has yet to be seen."



At the very least, Interpublic has already benefited from irresolution "Are we seeing recruiting opportunities? Yes. We are definitely adding talented people."

Interpublic Group isn't looking for a similar agency partnership. "Our independent agencies have higher margins, so our approach is that if it ain't broke, then don't fix it. If [our independent shops] need more resources, they can tap into McCann or larger shops. We are quite pleased with our current structure and see no need to merge our independents."

Interpublic Group reported that its first quarter 2014 revenue was $1.64 billion, compared to $1.54 billion in the first quarter of 2013, with an organic revenue increase of 6.6% compared to the prior-year period. Seasonal Q1 operating loss was $12 million, an improvement from a loss of $42 million a year ago.

Revenue increased 6.1% from Q1 2013, with 7.2% growth in Asia Pacific, 5% growth in the U.S., 21% growth in the U.K., 5.1% in Continental Europe, and 5% in Latin America. Automotive, healthcare, technology, and telecomm were strong drivers.

Many of Interpublic's global brands, including McCann, Initiative, UM, GolinHarris International, as well as domestic brands, such as Deutsch, Hill Holliday and Mullen, helped to drive growth in the quarter, the holding company said.

"Our portfolio is strong," said Roth. "We look at the total pot of what [clients] want to spend and look at what is allocated," says Roth. "Clients want advertising, digital, experiential, everything. What we do is approach this cradle-to-grave. We don't pay attention to silos. We look at media, creative, digital, PR all together to offer truly integrated offerings."

"Our ability to deliver customized, integrated service offerings is increasingly becoming a differentiator for us, as are our digital capabilities," says Roth. "We believe that we remain well-positioned to meet or exceed our 2014 organic growth target of 3%-4% and an operating margin of 10.3% or better.”

Looking forward, Interpublic is focused on landing a billion-dollar account. "Microsoft is a huge pitch, and we are in the final stages," says Roth. "We are quite pleased with what we put forth. International media is part of our pitch, but everything is on the table [including media, digital and creative]."

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