IPG Posts 6.3% Organic Growth For The Third Quarter

Interpublic shares were on the upswing Wednesday morning (up 4% to $18.59) after the company reported strong results for the third quarter of the year, ended September 30.

Revenue was up 8.3% to $1.06 billion, with an organic revenue growth spurt of 6.3%, nearly three times the growth rate that the company reported for the same period a year ago. Net income nearly doubled to $92.8 million.

IPG is the second Adland holding company this week to report strong third quarter results. Yesterday Omnicom posted results that showed it garnered 6.5% organic growth for the period.

Like Omnicom, IPG said the U.S. market was exceptionally strong for the quarter. Organic growth in the region was 7.9% while growth outside the U.S. was 4.2%.



Interpublic CEO Michael Roth told analysts on a Wednesday morning conference call that “This strong performance reflects contributions from all of our major disciplines, including advertising, marketing services and media. We had especially notable growth from our digital services across the portfolio.”

Roth added that “Among our agencies, McCann, FCB, Mediabrands, Huge, and our marketing services specialists in CMG all grew at high levels in the US. Top client sectors helping to drive domestic growth were Healthcare, Food & Beverage, and Auto & Transportation.”

For the first nine months of the year, revenue was up 6.6% to $5.3 billion with organic growth of 5.9%. Net income jumped to $174 million from $77 million for the first nine months of 2013.

“Our performance is the result of a series of long-term strategic decisions, which we have backed with significant investment over time,” said Roth. “Our focus has primarily been in upgrading and developing talent – in senior leadership, strategic and creative roles, and building digital capabilities into all of our agencies, as well as on investing in our largest and fastest growing markets.” With the strong showing so far, Roth said it was clear the company would exceed its goal of 4% for the full year.

Roth also touched on the impact of programmatic buying, which he said accounted for about 10% of the company’s buying—7% globally and somewhat higher than that in the U.S.

And while Roth stressed that the company is not in the arbitrage business, he didn’t rule it out as a possible future business model. Clients he noted have differing opinions on the approach, with some not caring as long as they get the price agreed upon, while others see it as “inherently wrong.” The programmatic business is still in Its early days, he added: “We will continue to look at it to see if our model is the best model.”

"Money Up" photo from Shutterstock.

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