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Ciesco: IPG sets the pace in the first quarter of 2016 with impressive organic growth

By Ciesco.

IPG set the pace in Q1 but it was Publicis who surprised the market with above expected growth.

Interpublic Group’s reported revenue increased 3.9% to $1.7bn. As with full year 2015 results, IPG enjoyed the highest organic growth of the four largest holding companies in Q1 2016, with 6.7%. Net acquisitions accounted for just 0.3% of reported revenue and currency fluctuations reduced revenue by 3.1%. IPG’s impressive organic growth was driven by strong performance in its home region of the US with 8.3% and high organic growth within its integrated agency networks of McCann Worldgroup, FCB, MullenLowe Group and IPG Mediabrands, which grew 7.6% organically in the quarter.

WPP, the largest of the holding networks, reported revenue growth of 10.5% to £3.1bn ($4.4bn) for the first three months ended 31 March 2016. On a like-for-like basis (organic growth), which excludes the impact of currency and acquisitions, revenue grew 5.1%. Net sales, the most meaningful and accurate reflection of WPP’s top line growth, increased 3.2% on a like-for-like basis. Reported net sales increased 8.1%, with 3.5% coming from acquisitions and 1.4% by exchange rates. Branding & Identity, Healthcare and Specialist Communications was WPP’s best performing sector, enjoying 5.2% organic net sales growth, whilst Data Investment Management was the weakest performing sector with -0.1% organic growth.

Omnicom’s revenue for the first quarter of 2016 increased 0.9% to $3.5bn. Organic growth accounted for 3.8% with net acquisitions accounting for just -0.1% and forex -2.8%. Organic growth was largely driven by 7.9% organic growth in Omnicom’s advertising discipline, which accounted for over 50% of the company’s total revenue.

Publicis’s shares recorded their biggest single day gain in seven years after the company posted 2.9% organic growth for the quarter, well above analyst’s expectations. Total revenue grew 8.9% to €2.3bn ($2.5bn) with acquisitions accounting for 7% and forex for -1%. Publicis’s digital activities, which now account for 55% of the group’s revenue, experienced organic growth of 7.6%.


Regionally, the US was a strong market for all four companies in Q1, particularly for IPG with 8.3% organic revenue growth. Omnicom enjoyed 4.5% organic growth in North America, which accounts for over 60% of the company’s revenue.

China, which is still seen as an area of concern for many, did not seem to have a negative impact on the holding companies’ Q1 results. For Omnicom and Publicis, APAC was the strongest performing region, with Omnicom enjoying 5.1% growth in the region and Publicis with 3.8%.

0aa96c9Ciesco CEO Chris Sahota (left) says: “Q1 is normally the most challenging quarter of the year with the seasonal nature of the industry, however Q1 2016 was a good start for all four of the large holding companies. Later in the year the industry will see a boost in media spend due to a number of quadrennial events taking place – the UEFA Euro Football Championship in France, the Rio Summer Olympics in Brazil and the US presidential election.

“However, there are macroeconomic and geopolitical uncertainties, including the possibility of the UK leaving the European Union. Q3 will be a significant quarter to gauge the underlying full-year performance of businesses within the sector.”


All data obtained from WPP, Omnicom, Publicis and Interpublic Group of Companies’ Q1 2016 earnings reports and presentations.

Organic growth: the year-on-year increase or decrease in revenue from the prior period, excluding the FX impact and net acquisition revenue

For WPP, net sales figures and organic net sales growth are used rather than revenue and organic revenue growth, as they show underlying trends more accurately, given the increase in both online media buying as principal together with pass-through costs for data investment management.

Ciesco is a boutique corporate finance advisory firm specialising in the digital, media, marketing and technology sectors.

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