IPG reports a strong quarter, 'outperforming the industry to a significant degree'

Interpublic Group reported strong second-quarter results on Tuesday, after both Publicis Groupe and Omnicom Group saw shares fall on weaker-than-expected earnings last week—leading one analyst on the holding company's earnings call to admit, "Hard to find things to complain about here." The advertising holding company said organic net revenue grew 5.6 percent worldwide over the quarter a year earlier, and 4.6 percent in the U.S. (Organic revenue excludes factors such as acquisitions.) IPG's second quarter net revenue increased 6.2 percent to $1.95 billion, up from $1.83 billion year-over-year. Pivotal Research senior analyst Brian Wieser said in a research note that the holding company's results were "very strong" as whole, "once again outperforming the industry to a significant degree." He added that analysts see opportunities for the industry to return to organic growth, if at levels lower than between 2010 to 2016. IPG itself won't outperform the industry in the long run, he predicted, even considering its recent deal to buy data-marketing power Acxiom. Publicis and WPP will likely grow faster because they get a higher share of revenue from media duties and from outside the U.S., he said. IPG CEO and Chairman Michael Roth called the company's organic revenue growth an "encouraging signal" that some marketers have resumed spending more with the company. The holding company has also seen growth in project-based business, he said. "In addition, our strong performance in the U.S. shows that we can leverage opportunity in today's strong economy and in our largest market," he said on an earnings call to discuss the resuls. Roth said the holding company saw "exceptional growth" in media and at its integrated agencies, digital services, PR, events and sports marketing, specifically ciiting out Mediabrands, McCann Worldgroup, FCB, MullenLowe, Huge, Weber Shandwick, Golin, Octagon and Jack Morton. He also mentioned new business wins including Converse and Revlon at IPG media agency Initiative, Godiva at McCann and Ally Financial at R/GA. One analyst asked for additional color on the "real, notable divergence" between IPG's results and those of its competitors. "You don't accept the fact that we're just better than everyone else," Roth joked. He then cited the company's "open architecture" strategy, which involves maintaining individual agencies' brands and their culture while giving clients access to all disciplines across its network. Other holding companies, notably WPP, have frequently assembled bespoke agencies for major clients by pulling resources from various agencies and putting them under a new name. "Frankly, it's working in the marketplace," he said. "We didn't have to restructure our entire company, and we've been doing this now for 12 or 13 years." Acxiom Marketing Solutions Though the holding company's results this quarter were strong, Roth acknowledged changes impacting the industry, including business disruption for marketing clients and "seismic shifts in media and consumer habits." He said the Acxiom transaction "directly addresses this changed marketing and media world." "We feel that once it is completed, this transaction will position our company for the next decade of data-driven marketing solutions, ahead of our peers as well as new entrants into the space," Roth said. IPG's competitors have argued that Acxiom is not the key to the future. On Omnicom's call, Omnicom Digital CEO Jonathan Nelson said the company falls on the side of "renting data versus buying the company that compiles the data." "We see data as commodity," Nelson said. "In fact, when you look at the Omni platform we announced deals with LiveRamp, with Neustar, and with Experian, all of which have similar first-party style data. We just believe that this enhances our position of neutrality and removes any perceived conflict we might have with our direct clients," Nelson said on the call last week. LiveRamp is Acxiom's other major business. On Publicis' call, Publicis Media CEO Steve King said the holding company continues to believe in its strategy of being data agnostic and "leveraging the best data sources available around the world." "Our clients must stop being disintermediated from their data and they need to build robust data strategies building and enhancing their own first-party data sources," King said. On Tuesday's call, IPG seemed to respond. Roth said Acxiom pulls its data from 20,000 sources, then "cleanses and organizes that data to provide a 360-degree view of each individual consumer, and the preferences and behaviors that drive purchase decisions." That service makes IPG smarter and "more neutral, if anything," he said. "Owning data is very different from owning media inventory, and then reselling that media inventory to clients," Roth added. "Taking inventory media positions rightly impacts trust. We remain agnostic to media and to data," Roth said. Roth added that first-party data management is nearly 70 percent of the Marketing Solutions business, and that IPG can own the capability but still plug in and use a range of other independent data sources. "The area where neutrality does matter is the data-reselling portion, which is staying with Live Ramp after the transaction closes," Roth said. "We will continue to have a long-term contractual relationship with LiveRamp and have access to their offerings."

IPG reports a strong quarter, 'outperforming the industry to a significant degree'

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