IPG plans to invest more in principal-based media buying

Principal-based media buying was once again central to a holding company’s third-quarter earnings report—this time Interpublic Group of Cos.‘—marking the second time in five days. IPG also gave an update on its plans to sell R/GA and Huge, possibly for less than it previously thought the digital agencies were worth. In its report to shareholders today, CEO Philippe Krakowsky said that IPG will be investing more in building out principal-based media buying services in response to a changing media landscape. Principal-based buying is essentially media agencies buying media and reselling it to clients. More on the topic: When agencies become media sellers Krakowsky said that there has been a “shift” in the media market in the past 18 months that has seen many clients “accept and even embrace” principal buying, which he said has had a clear impact on IPG’s business. He said that principal media was a “decisive” factor in large media pitches that IPG didn’t win. (Ad Age previously reported that principal media buying likely played a key role in Amazon’s recent media review—it split its media business between Omnicom Media Group and WPP, though IPG retained some work.) During IPG’s call, Krakowsky admitted that his competitors are better positioned in this space since they embraced this way of operating sooner. See all of Ad Age’s 40 Under 40 honorees here “As a fast follower, I think we’ve got a lot of upside ahead,” he said. “One of our senior media folks said we’ve got significant unencumbered billings that we haven’t committed into the market with this model, whereas perhaps others who are further along in applying this model have essentially already leaned into it. There’s more green field in terms of what we can do that is good for clients, but also that will benefit us.” There has already been “strong interest” from clients in its principal-based buying offering, Krakowsky said. “We’ve seen some early wins in new business, and many of our current clients have already fully opted into this new trading model going forward as of the new year,” he said. “As we build scale, we’ll also be well-positioned to incorporate data and tech components into the value proposition that we place before marketers.” When Publicis Groupe reported its results on Oct. 17, it emphasized how it is approaching media transparency and broke out its principal-media buying revenue in the U.S. R/GA and Huge IPG classified R/GA and Huge as “held-for-sale” and recorded a non-cash goodwill impairment expense of $232.1 million in the quarter related to their potential sale, which essentially means that the agencies are likely to be sold for less than the amount at which IPG originally valued them. The pending sale is an ongoing process that Krakowsky said is “well down the tracks,” without disclosing the identity of suitors. IPG’s third-quarter net revenue fell 2.9% and organic revenue was flat compared to a year earlier. The holding company still anticipates roughly 1% organic growth for the year.

IPG plans to invest more in principal-based media buying

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