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Interpublic Posts 6% Increase in Revenue, Smaller Loss

CEO Michael Roth Calls Out Strong New Business Growth at FCB

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Michael Roth
Michael Roth

Ad holding company Interpublic Group said revenue rose 6.1% in the first quarter of the year from the quarter a year earlier and reported a smaller operating loss than a year ago.

First quarter revenue was $1.64 billion, compared to $1.54 billion in the same period last year, according to the company, which owns agencies including FCB and McCann and is the fourth-largest agency holding company by revenue, following WPP, Publicis Groupe and Omnicom Group.

IPG reported a net loss of $20.9 million in the first quarter, an improvement from a net loss of $59.2 million in the first quarter of 2013. Its U.S. revenue increased 5% to $939 million, while international revenue grew 7.7% to $698.5 million. Organic revenue, excluding effects from events such as acquisitions, grew 6.6%, the company said.

"We are pleased to report a strong quarter in terms of organic revenue growth and earnings performance," Interpublic CEO Michael Roth said in a statement ahead of a call with analysts. "We saw solid contributions from across our agency portfolio, with strength in the US, as well as significant growth in Latin America and Asia. Our ability to deliver customized, integrated service offerings is increasingly becoming a differentiator for us, as are our digital capabilities. We believe that we remain well-positioned to meet or exceed our 2014 organic growth target of 3-4% and an operating margin of 10.3% or better."

Mr. Roth added during a call with analysts that IPG's new business pipeline was "solid," and that it was seeing a number of RFPs in the area of integrated services, both at the agency network and holding company level. He called out the recent rebranding of DraftFCB into FCB (Foote, Cone & Belding) and said the agency's new business wins from Trulia, Ghirardelli and Levi's are an early positive sign that a "leadership and cultural shift at the agency is taking hold."

Mr. Roth also mentioned leadership changes at IPG's Boston agencies, where Karen Kaplan was promoted to chairman at Hill Holliday and Kristen Cavallo was promoted to president at Mullen, and cited Mullen's viral hit for American Greetings, which has spawned parodies from other brands like Bud Light.

Frank Mergenthaler, chief financial officer, said IPG had grown in nearly all client sectors, making special note of automotive and technology and telecom. He called out "notable increases" at marketing services specialists such as Jack Morton and McCann.

Headcount at Interpublic increased by 1.2% during the quarter, half of which was due to acquisitions by the company, Mr. Mergenthaler said. (Lowe acquired digital agency Profero in January, while FCB made a deal to buy Inferno in London in December.) "A little more than 50% of our new hires were in expanding areas of the portfolio, such as digital, media and higher growth regions of the world," he added.

Meanwhile, Omnicom, which also reported quarterly earnings Tuesday, reported a 3% rise in quarterly revenue but flat net income.

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