Polansky: Interpublic PR firms report slight revenue drop in Q2

Interpublic Group CEO Michael Roth said he expects the holding company's PR firms to rebound.

NEW YORK: The PR firms within Interpublic Group’s Constituency Management Group posted a slight revenue decrease on both an as-reported and organic basis in the second quarter, Weber Shandwick CEO Andy Polansky said Tuesday morning.

The earnings were down year-over-year compared with high-single-digit growth on an as-reported basis and mid-single-digit growth on an organic basis in the same quarter of last year.

The PR firms in CMG are Weber, Golin, DeVries Global, Current, Creation, and The Axis Agency. The unit also includes marketing specialist firms such as Jack Morton, FutureBrand, and Octagon. Much of Interpublic’s Integrated Agency Network consists of creative networks such as McCann Worldgroup, FCB, and MullenLowe Group.

Overall, Weber has "good momentum" heading into the second half of the year, which Polansky attributed to recent account wins and additional business from existing clients.

"Healthcare is a particularly strong sector for us this year, and we have seen an uptick in employee engagement and corporate consulting services," he said.

DeVries Global recorded nearly double-digit organic growth in the first half of 2017, while Golin had mid-single-digit organic growth. Weber’s performance for the first six months was up slightly organically, following high-single-digit organic growth for the first half of 2016, said Polansky.

Interpublic Group chairman and CEO Michael Roth said on an earnings call on Tuesday that he expects growth at the holding company’s PR agencies to rebound.

"This is a group that has outgrown the industry very consistently, with high-single-digit, top-line, cumulative growth over the past three years, and along the way has redefined the PR discipline for the digital age," Roth said on the call. "Our takeaway from our recent review is that their Q2, while disappointing, was an anomaly. The second half should reflect a stronger pipeline in these project-based businesses."

Roth added that Weber and Golin remain market leaders.

"Despite a macro and client climate that saw clients hold back on projects, we are confident in these agencies, based on their very strong track record in recent years," he said.

The CMG division as a whole reported a 2.2% organic revenue drop in the second quarter. The group earned $347.1 million in the three-month period that ended on June 30. The holding company overall reported a 0.4% increase in organic revenue growth in the period to $1.9 billion; net income was down 40.9% to $94.6 million and operating income dropped by 7.9% year-over-year to $206.5 million.

Impact of dropping Egypt contract ‘non-material’
Polansky said Weber’s decision to withdraw from a public affairs contract with Egypt this month will have a "non-material" financial impact on the firm. He added that the decision not to represent foreign governments on assignments that are designed to influence U.S. policy will not affect other clients.

The firm will continue to handle tourism and other work for foreign entities, he added.

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