IPG continues impressive growth streak in Q4, signals strength in Acxiom deal
- Interpublic Group of Companies (IPG) reported $2.41 billion in net revenue for Q4 2018, a year-over-year organic net revenue increase of 7.1%, according to a company press statement. Organic net revenue increased 6.3% in the U.S. and 8% internationally. IPG is targeting organic growth of 2% to 3% for 2019.
- The earnings report is the first since IPG completed its acquisition of Acxiom Marketing Solutions, Acxiom's data marketing services division, on Oct. 1 for $2.3 billion. Michael Roth, IPG chairman and CEO, told analysts on a call discussing the earnings that the company is pleased with Acxiom's performance so far, but noted that the unit's performance will not be factored into IPG's broader organic growth until Q4 this year.
- IPG representatives tied its U.S. organic growth to increases across healthcare, auto, financial services and consumer goods segments. Healthcare accounted for about 25% of IPG's total business and consumer goods for 8%.
With its fourth consecutive quarter of strong growth, IPG continues to be an outlier in its category, faring well in what has become a difficult time for the major ad holding companies.
While it remains too early to tell how much Acxiom will bolster IPG's bottom line over the long term, the latest round of earnings indicate the acquisition, first announced in July last year, has been a savvy one at a time when many agencies are struggling to get a handle on digital technology, including data marketing services that are increasingly in demand from brand clients. IPG's corporate and "other" segment revenue for the quarter was $182 million, which executives equated with Acxiom's Q4 performance.
"Data capabilities unpack an understanding of the entire customer journey. That’s a core principle in our era of fragmented media," Roth said on the earnings call. "Strategically, the acquisition puts us ahead several years to a fulfillment of our strategy in data and analytics."
IPG's strong Q4 results are in contrast with rivals like Publicis, especially in regards to the affects of the packaged goods segment on business. In earnings released last week, Publicis reported a $170.4 million decline in traditional advertising for 2018, with most of the cuts coming from its U.S.-based CPG clients, per Ad Age. The company experienced a 0.8% organic growth decline in North America and a 0.1% growth globally. Other agency groups, including Omnicom, have fared better, but experienced slides on key business metrics like revenue for Q4.
- Seeking Alpha Interpublic Group of Companies Inc. (IPG) CEO Michael Roth on Q4 2018 Results - Earnings Call Transcript
- The Wall Street Journal IPG Says Its Consumer-Goods Business Is Doing Fine
- Marketing Dive Deal of the Year: IPG buys Acxiom Marketing Solutions