IPG Posts Strong 6.7% Q1 Organic Growth

Interpublic Group today reported strong organic growth for the first quarter of the year — 6.7% — with total revenues of $1.74 billion. By comparison, Omnicom reported 3.8% Q1 organic growth, while Publicis Groupe reported 2.9% growth. WPP reports first-quarter results next week.

IPG’s operating income nearly tripled in the quarter to almost $21 million. Net income was $5.4 million versus a loss of $1.8 million a year ago. The company recorded a one-time loss of $16 million on the sale of undisclosed businesses in the quarter.

Company executives told analysts and investors on a conference call Friday morning that contributions came from all geographic regions and divisions within the company.

The U.S. was particularly strong, with organic growth of 8.3% on top of 6.1% growth in the same period a year ago. Sixty-three percent of the company’s revenues are now derived from the U.S. -- up from 60% at the end of 2015, said Michael Roth, IPG’s CEO. He gave shout-outs to McCann, RGA, Huge, FCB, Mediabrands, Weber Shandwick, Golin and MullenLowe for their Q1 contributions.

Strong category sectors included technology, telecommunications, healthcare, food and retail.

Despite the troubled Brazilian economy, the holding company posted 11.6% organic growth in Latin America (breaking even in Brazil). The Asia Pacific region was up 2.7% and despite some “noise” about the Chinese economy the company posted double-digit growth in the country. The UK was up 3.5% and Continental Europe was up 1.7%.

On the diversity front, Roth stated that 55% of the company’s managers are now women and 20% are people of color. He made a point of saying that behavior that “runs counter” to the company’s values — particularly when it comes to encouraging diversity wouldn’t be tolerated, a not-so-veiled reference to the management change at Campbell-Ewald after a racist memo was circulated at the agency’s San Antonio office.

Roth said the overall tone of the marketplace was pretty good despite concerns about some regions. Generally, he said, marketers seem “willing to invest behind their brands.” He noted that among the firm’s top-20 clients, organic growth was up 12%. It’s critical, he said, to keep existing clients pleased and impressed with the company’s offering and results—“we treat them every day like it was a pitch,” he said.

Roth said the new business pipeline remains strong although review activity is not as intense as it was in 2015. At IPG the company is defending its BMW and Fiat media assignments while McCann is preparing to defend the U.S. Army account (its current contract has been extended to 2017). 

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