MDC Partners Delivers 'Industry Leading' 8.2% Q3 Organic Growth

MDC Partners reported that Q3 organic growth increased 8.3%, an "industry leading" amount surpassing Omnicom's 6.5% organic growth, IPG's 6.3%, and Publicis Groupe's 1%. Consolidated revenue for the third quarter of 2014 was $326.9 million  an increase of 13.2% compared to $288.7 million in the 3Q of 2013. For the nine-month period ended September 30, 2014, consolidated revenue was $937.2 million — an increase of 11.3% compared to $841.8 million in the nine months ended September 30, 2013. 

Given the impressive numbers, and perhaps the fact that one his shops — Crispin Porter+Bogusky — just nabbed the highly sought after Infiniti creative assignment, MDC CEO Miles Nadal was in a boastful mood on a Wednesday afternoon call with analysts.

"We are healthy, strong, and better positioned than all of our competitors," Nadal asserted on the call. "We have a deeper understanding of consumers, a more innovative and agile culture fused together to empower our people to adopt new tools and technologies that deliver proven returns that are effective and efficient without concern for legacy infrastructure."

Net new business wins in the quarter totaled $28.7 million. This performance was led by several account wins including Panera Bread, BMW Mini, Duracell, Fresh Direct, and Marriott Hotels. However, the Infiniti win will be reflected in 4Q.

"Infiniti is an early validation of our global expansion strategy," said Nadal. "This is a transformational moment. They saw the entire marketplace; every big, small, and medium-sized organization -- and MDC played an important role in their ability to scope out their offerings. They saw we are more nimble, more agile, and more importantly, can help them sell cars."

MDC now reports 8% of its total revenue comes outside of North America, up 6% year-over-year. "Our networks are all winning business on a global basis that didn't happen five years ago," says Nadal. "It's indicative that our structure and model is well-suited for client needs today and for the future. Historically, there are accounts we would have never been in consideration, let alone win."

While executives are pleased with their current performance, they are even more optimistic about future results. "There's no rhyme or reason when clients decide to hold a review, but in 4Q, we are very excited about our number that we are putting in that will be up year-over-year, and total year, will be up substantially," says Nadal.

"The reason we are so confident is the absolute growth, and the conversion to the bottom line. The nature of the wins we have  and most of it is fee-driven  will result in a much greater incremental revenue and our margins will grow more."

Company CFO David Doft added: "While our investment in organic growth initiatives as well as a larger and more significant slate of new business modestly impacted earnings and margin during the quarter, our expectations for the year stand, and we continue to be on pace to achieve our mid-term target margins of 15% to 17%." 

The agency is also focused on internal expansion through acquisitions and new shops. Nadal is particularly excited about Gale43, a multi-hybrid agency comprised of mainly ex-Sapient staffers that he projects will become a $50 million a year firm in the next five years. "It combines technology, digital, consulting to enhance digital marketing, eCommerce, and social media in a measurable way and drives returns both on the back-end of technology and the front-end of creative." 

Looking forward, MDC Partners will host its Investor Day on December 4 in New York City.

“Money Up” photo from Shutterstock.

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