IPG, forecasting growth at the lower end of expectations of between 1% to 2% in 2024, has started to see a change in the advertising market.
The underperformance of digital specialty agencies plus a contraction in spend by technology and telecom clients has been a drag on growth.
IPG reported 1.3% organic growth in net revenue to $US2.18 billion for the March quarter, which it said was consistent with 2024 targets.
Data and tech driven media offerings, healthcare marketing and public relations performed “strongly”.
And the rest of the year could be brighter.
CEO Philippe Krakowsky said marketer sentiment has begun to improve relative to most of last year, and the new business pipeline is more active.
“It bears noting that the tenure of our conversations with clients has been more positive since the start of the year compared to the last three quarters of 2023,” he told a briefing of market analysts.
“Heading into 2024, most of the wait from the tech and telecom sector will be due to the loss of a large AOR (agent of record) assignment with a telco client late last year.
“Outside of that item, client decreases in the sector have largely stabilised.”
Krakowsky said IPG continues to expect to achieve full year organic growth of 1% to 2%.
However, a recent decision by a “significant ongoing client” would likely make achieving the top end of that target more challenging.
“From the standpoint of clients, we again had growth in six of eight client sectors worldwide, led by double-digit increases among our healthcare and food and beverage clients, followed by solid increases across the consumer goods and retail sectors, as well as our other sector of public sector and diversified industrials,” said Krakowsky.
“We anticipate that the strongest and most consistent growth areas of our business, such as our data and tech-driven media offerings, specialist healthcare marketing expertise, PR and experiential marketing capabilities are positioned to continue their strong performance over the long-term.
“These higher value offerings, which include opportunities for outcome-based performance compensation, combined with our proven operational discipline, will result in sustained long-term margin improvement.”
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