IPG posts strong Q2 performance, advances growth targets

Dive Brief:

Ad holding giant Interpublic Group (IPG) posted net revenue of $1.95 billion for Q2 2018, a 6.2% increase over the $1.83 billion it earned in Q2 2017, according to a company news release. Organic growth increased 4.6% in the U.S. and 7.2% internationally.
Total revenue increased 9.4% to $2.39 billion for the quarter. The results prompted IPG to increase its organic growth target to 4% to 4.5% for 2018, Michael Roth, the company's chairman and CEO, said in a statement. Previous organic growth projections were 2% to 3%, according to The Wall Street Journal.
About a quarter of IPG's business is comprised of healthcare, and the sector was especially strong for the quarter, Roth said during a call discussing the company's earnings .

Dive Insight:

IPG's strong Q2 performance is an outlier amid what's so far been a rough earnings season for the larger ad holding groups. Competitors Omnicom and Publicis have reported disappointing performance, with the former struggling in North America and the latter missing its targets despite winning some major accounts in the first half of 2018, including the hotel giant Marriott's paid media business.

For Q1 2018, IPG reported $1.77 billion in net revenue, a 5.9% increase, with Roth noting that consumer packaged goods (CPG) companies were making a return to spending with the company after a relatively staid period. CPG spending worldwide has been relatively flat for awhile, and Roth's focus on healthcare in Q2 raises the question of whether the first-quarter hike was more of a blip than a trend.

IPG has had its share of struggles as well, and is working to hold onto its U.S. Army account, which is under audit, and Fiat Chrysler, which put its media account up for review in May, per the Journal. Still, being able to adjust targets toward larger organic growth targets is increasingly rare amid the large ad holding groups, which have for several years grappled with digital transformation and a mounting number of competitors, including specialist shops, consultancies and their own clients' in-housing of marketing services.

Agencies have broadly been working to ramp up their data and technology offerings to get an edge on these threats and meet marketers demands for better marketing personalization and campaign measurement. IPG earlier this month announced the acquisition of Acxiom Corporation's data marketing business for $2.3 billion in way that could seriously bolster its capabilities on those fronts.

Streamlining of services has also been in the company's strategic toolkit. In May, IPG Mediabrands, IGP's media management and data division, combined the agencies Mediabrands Society and Ansible under its Reprise umbrella to set up a new, full-service media marketing unit and offer a full suite of digital media services within one group.