Michael Roth, the CEO of the Interpublic Group of Companies, says his company’s “open architecture structure” sets his business apart in the advertising industry.
By that he means open collaboration across business units and agencies.
“We can show that we can work together on a client basis, bringing all these resources together, there's no need for them to use anyone else,” he told an analyst briefing after releasing IPG's third quarter results.
“And the relationship we develop as a business partner to our clients is indestructible when that works correctly. So that's the whole premise. And that's the differentiator between IPG and the other agencies.”
Analysts at Evercore ISI describe IPG’s September quarter organic net revenue growth of +1.4% as solid. Headline net revenue rose 8.7% to $US2.06 billion.
“Strength was driven by their media, healthcare, public relations, and sports & entertainment offerings,” write Evercore ISI analysts David Joyce, John Belton and Vijay Jayant in a note to clients.
“Healthy client spending included healthcare, financial services, consumer goods, tech, telecom and retail sectors."
The result compares well to other advertising companies. Omnicom posted a positive 2.2% of organic growth, WPP was over the line at 0.5%, but Publicis Groupe was negative 2.7%.
A theme was a softness in the US.
For IPG, the analysts say the US was weaker than expected but this was offset by strength in Europe and South America.
The US business was dragged down by client losses late last year but IPG says the US agencies still have underlying growth.
Roth is forecasting full year organic growth at the high end of previous guidance of 2% to 3% despite those headwinds in the US where IPG has 65% of its business.
Here’s how Evercore ISI sees IPG’s US revenue recovering:
“I've had a number of meetings with our global clients that are actually calling out open architecture to me and the team which is great,” Roth says.
“And sitting, sitting at the table you have McCann you have FCB, you have Weber Shandwick, you have R/GA, you have Mediabrands and you have Acxiom.
“Open architecture is at our core, collaboration is at our core. We didn't have to break up all of our agencies and put them together in one silo.
“We build our brands. Our brands are – we're very proud of each of our brands. The retention of the talent, the creative capability within those brands is world class.
“And why would we break those up. All of it is accounting and all you have to do is put these people in a room and work together and magic comes out of it.”
Roth calls this IPG’s go-to market strategy.
“That's why we've been performing the way we have and clients know that,” he says. And they're asking us for the rest of IPG coming to the table.”
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