IPG raises full-year guidance even as a 'majority' of clients plan for a potential downturn

Interpublic Group of Cos. raised its full-year revenue growth forecast slightly as it reported 5.6% organic revenue growth for the third quarter.

The agency holding company now expects its organic revenue will rise 7% this year. In July, it anticipated exceeding 6.5% organic growth this year.

Despite the rosier forecast, IPG CEO Philippe Krakowsky said the company is seeing a “more challenging macro environment going forward.”

In the holding company’s second-quarter earnings call, Krakowsky said that some clients had been asking for “contingency plans” in the case of an economic downturn. Now that has expanded, with a “majority” of IPG’s clients asking for advice on how to redeploy media and marketing investments in the event of a downturn.

"Historically, we know that marketers that continue to invest through the cycle come out ahead in the long run, with measurable gains in market share and growth,” Krakowsky said. “These days, that’s a conversation that’s ongoing with many of our clients, who also know that given the duration of past downturns, reductions are generally short-lived.”

He added that “to a lesser degree, we are also seeing some deferrals of digital project work," but said, “I don't think we're talking about something that is a long-term trend, it's just a function of the current uncertainty." Said Krakowsky: “My sense is that we won’t necessarily have clarity or full commitment on some of those projects until a bit deeper into the quarter than we usually would."

Results by segment

IPG's third-quarter net revenue increased to $2.3 billion, up from $2.26 billion a year earlier.

The holding company saw growth in the U.S and internationally. In the U.S., which makes up 66% of the company’s net revenue, IPG’s organic revenue rose 4.4%. Organic revenue in its international markets rose 7.8%.

Revenue in the holding company's Media, Data & Engagement Solutions segment—made up of Mediabrands, Acxiom, Kinesso, and IPG’s digital and commerce specialist agencies including MRM, R/GA and Huge—grew by 3.8% organically. The growth was led partly by double-digit growth at Mediabrands, while both R/GA and Huge experienced “softness,” which IPG Chief Financial Officer Ellen Johnson said “weighed” on the segment’s results.

Organic revenue grew 6.7% in IPG’s Integrated Advertising & Creativity Led Solutions segment. According to Johnson, the segment, which includes agencies like IPG Health and MullenLowe, was led by a “strong increase” at IPG Health and “solid growth” at McCann.

IPG’s Specialized Communications and Experiential Solutions segment, which consists of agencies Weber Shandwick, Golin, Jack Morton, Momentum, Octagon, and DXTRA Health, saw organic growth of 7.8%.

Healthcare continues to be a strong sector for the holding company, according to Krakowsky. IPG recently launched a medical communications offering called IPG Health Medical Communications, which combines expertise from eight agencies within the IPG Health network.

More results

IPG is the third major agency company to release third-quarter results. So far, each holding company has raised its 2022 organic revenue forecast.

Earlier this week, Omnicom raised its full-year organic revenue forecast, calling for growth of 8% to 8.5%, and posted third-quarter organic growth of 7.5%. Publicis Groupe also raised its forecast, calling for organic revenue to rise 8.5% this year, as it posted third-quarter organic growth of 10.3%.

WPP will give its third-quarter update on Oct. 26. Stagwell will release results on Nov. 3. Dentsu Group will announce third-quarter earnings on Nov. 14.