Interpublic Group posted a 2.8% net revenue gain in the first quarter to $2.03 billion with organic revenue growth (which excludes the impact of M&A and currency fluctuations) of 1.9%.
Like WPP, also reporting today, IPG’s results marked a return to growth for the first time since the COVID-19 pandemic hit with full force about a year ago.
Both companies returned to positive territory earlier than expected — executives at both firms had earlier predicted Q2 as the quarter when growth would return.
And for now it appears that growth will be sustained going forward.
IPG said it is currently expecting full-year 2021 growth of between 5% and 6%. (WPP forecast mid-single-digit growth).
IPG CEO Philippe Krakowsky told analysts this morning on an earnings call that the company is “pleased with results this quarter,” and that while clients express “cautious optimism…the tone of business has firmed in the last few months.” Clients, he added, “are pivoting to investment mindset,” from a marketing standpoint as they begin to position for post-pandemic growth.
In the U.S. -- IPG’s largest market -- the company fell just short of flat with an organic decline of 0.2%, while its international business overall posted a 6.3% gain, led by a 12.4% surge in Continental Europe.
The UK and APAC gained 3.4% and 3.5%, respectively, while LATAM improved by 5.%.
In Europe, Krakowsky said categories contributing to the strong growth included food and beverage, consumer package goods, healthcare and financial services.
And if there is any upside to further spikes of COVID-19 cases in the region, he added, it is that clients are better prepared. “There’s a sense that people are on a path to something,” he said.
Travel and entertainment costs were sharply lower, given the pandemic -- although at some point they are expected to rise, but probably not to pre-pandemic levels, Krakowsky said.
Like its peers, the company is trimming back its real-estate portfolio and sub-leasing space, which will result in long-term cost reductions. The company will also resume buying back shares, although the precise timing is not clear.
Total salaries and related expenses as a percentage of net revenue decreased to 68.7% in Q1 versus 72.1% in Q1 2020.
Krakowsky told analysts that “we’re beginning to see an uptick in review activity,” after a year when many marketers put any thought of agency reviews on the back burner to deal with more pressing pandemic-related issues.
The IPG chief said he didn’t foresee the company doing any major acquisitions for the foreseeable future, but anticipated that it would get back to so-called “tuck-in” activity to strengthen existing operations when opportunities arise.