Strong Q3 performance boosts IPG comeback story

Interpublic (IPG) appears to be outstripping US rival Omnicom, judging by the two companies’ Q3 results.

Omnicom Group’s worldwide revenue dropped by 1.1 per cent to $3.7 billion in the third quarter of 2015, compared with the same period last year. The company claimed organic growth of 6.1 per cent but operating income fell slightly to $428m with net income falling 1.8 per cent to $239m. Omnicom took a 7.2 per cent hit over last year due to the strong dollar.

IPG, marginally less dependent on the US market, put currency headwinds at 5.9 per cent but still reported an organic revenue increase of 7.1 per cent and operating income growth of 12 per cent to $191m. The company says organic growth will hit five per cent this year, more than Omnicom and market leader WPP are forecasting.

These comparisons are always a bit ‘apples and pears’ because companies highlight different areas and, probably, measure organic growth differently.

But IPG, having stabilised under CEO Michael Roth after some rocky years, now seems to be growing again. Big agency network McCann is performing under new boss Harris Diamond – earlier this week it won more Verizon business – and digital agency R/GA has performed more strongly than its rivals in terms of both new business and awards.
Roth (above) says: “We are pleased to continue reporting strong results in our organic revenue growth and margin progress. Contributions to this performance came from across the portfolio – in terms of agencies, offerings, geography and client categories, all fueled by the outstanding creativity, insights and digital expertise that we have embedded throughout the group.

“Our commitment to incubating new skills, developing new products and services, and investing in new technology has allowed us to stay highly relevant in today’s digital world. This gives us confidence that our offerings will remain vital to marketers as they seek to navigate the increasingly complex consumer and media landscape.”

As ever there are clouds on the horizon, most notably the current spate of US and global media reviews in which IPG is unlikely to be a net gainer. The company needs to find a way of boosting its media offer outside the US, most notably in the UK where both Initiative and UM have become marginalised.

But Interpublic no longer looks like low-hanging fruit, there to be plucked by one of its bigger marcoms rivals.

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