Roth: IPG's off to a 'solid start' with 3% organic growth in Q2

The holding company maintains financial target of 2-to-3% organic growth for 2019.

Roth: IPG's off to a 'solid start' with 3% organic growth in Q2

Interpublic Group reported a 3 percent increase in organic net revenue growth for the second quarter of 2019, year-over-year, beating analyst expectations.

The holding company saw 4.6 percent organic net revenue growth for the first half of the year, compared to the same period in 2018.

"Looking at the quarter and the first half, our performance means that the year is off to a solid start," said IPG Chairman and CEO Michael Roth on this morning’s earning call. "Our client-centric integrated offerings continue to drive highly competitive global growth, and the quality of our talent continues to strengthen our offering."

Internationally, the company reported 6.5 percent organic growth, driven mainly by Latin America, Continental Europe and the U.K.

The U.S. was relatively flat for Q2, with 0.6 percent organic growth, compared to 4.6 percent in the same period last year, which was the result of account losses such as FCA media, the Army and Volkswagen’s creative business.

However, Roth said on the call: "It’s worth noting that total U.S. growth was 14.2%, due to the impact of acquisitions and dispositions which include Acxiom."

IPG’s Integrated Agency Network segment saw 3.2 percent organic growth in Q2, led by Mediabrands and FCB, with support from McCann Worldgroup, ,R/GA, MullenLowe and Huge.

Operating income in Q2 of 2019 was $264.2 million, compared to

$249.2 million in 2018, while operating income for H1 of this year was $314.4 million, compared to $288.0 million in 2018.

When asked about expanding Axciom’s capabilities beyond media within IPG, Roth said the company will – and already has – start introducing the offering to its creative capabilities and agencies.

"This year, we didn’t want to rush out and force everything on everybody because I know a lot of comments about how difficult these transactions are to integrated," he said.

Roth added that "targeted marketing" is one of the main purposes of Axciom, in that it allows clients to reach individuals and their likes and dislikes rather than buying specific audience segments.

An analyst on the call also asked about the CMO title at several marketers being changed or eliminated and whether that has had an impact on IPG.

"So far we haven’t seen any big impact on the changes of the structure from centralized to decentralized," he said, "but candidly it plays to our strengths when they do that because now they really need a third party arbiter."

He added that IPG can help marketers as they look to focus on efficiency in local markets – something he said consultants can’t offer, specifically on the creative side of the business.

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