- Interpublic Group of Companies (IPG) saw net revenue down 2.3% year-over-year in the primary quarter to $2.18 billion, in line with an earnings statement.
- Executives attributed the dip to particular weakness in the tech sector, considered one of the firm’s largest client categories. Specialist shops Huge and R/GA also continued to weigh on performance while undergoing internal changes, including layoffs and restructurings.
- Beyond sector-specific challenges, executives described a macro environment that’s leading some marketers to prioritize short-term efficiency over brand effectiveness. The results signal that agency resilience is being more seriously tested at a degree of industry uncertainty.
IPG’s revenue dip marks a rare miss in an agency category that has otherwise weathered the pandemic and up to date economic volatility surprisingly well. Despite the Q1 bumpiness, leadership upheld a full-year outlook of organic revenue growth in the 2-4% range.
The ad-holding group lapped a very strong period, as revenue was up 11.5% in Q1 2022. The market has contracted deal since then, with a few of the sharpest austerity hitting the tech sector, considered one of IPG’s most vital client verticals. Discussing the Q1 results with investors, IPG CEO Philippe Krakowsky noted that six of the corporate’s eight client sectors grew in Q1.
In terms of strengths, IPG’s media, healthcare and data-marketing offerings performed well over the opening leg of the 12 months. Among major recent business wins, IPG Mediabrands was named agency of record and marketing transformation partner for Geico following a highly competitive review. The account wields about $1.4 billion in annual measured media spend.
Acxiom, IPG’s data-marketing unit, has also landed among the many fastest-growing full-stack marketing partners of Salesforce because the start of 2023. IPG has built out its Salesforce know-how in other ways, including through the acquisition of e-commerce solutions firm RafterOne last fall.
Still, Krakowsky indicated that many marketers are fascinated with strategy in ways in which pose obstacles to agencies focused on brand-building services.
“The current macro [environment] could also be making a moment in which, for certain clients, efficiency is prevailing on the expense of accelerating effectiveness in order to power business growth,” said Krakowsky on the earnings call.
Digital specialist shops R/GA and Huge have remained burdens on IPG’s bottom line, and experienced layoffs and leadership shuffles in recent months. Krakowsky said IPG expects to cycle past revenue decreases in the third quarter. Huge’s recent vision is best ironed out, the chief added, with fewer people and hours and a spotlight on a more consultative model.
Looking ahead, IPG is constant to take a position in emergent areas similar to Web3 and artificial intelligence. On the latter front, the group has introduced incubators and labs to work out where the automated technology might best be implemented. R/GA has began to make use of generative AI in the creative process for clients including Verizon, Opendoor and Nike.
Responding to an investor query about AI applications, Krakowsky said there may be a “great deal” the corporate could do on the commerce front. IPG last 12 months hired Jeriad Zoghby as chief commerce strategy officer to discover opportunities for future growth.
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