Polansky: Mid-single-digit revenue growth for IPG PR firms in Q3

Weber Shandwick's CEO said Weber, Golin, and Rogers & Cowan performed particularly well in the quarter.

NEW YORK: The PR firms within Interpublic Group’s Constituency Management Group posted mid-single-digit growth in Q3 on both an as-reported and organic basis, Weber Shandwick CEO Andy Polansky said on Friday.

"Q3 performance follows a strong Q2 as we continue to see top-line momentum in the business," he said. "For the nine-month period, year-to-date [revenue] for the CMG group of PR firms is low-single-digit on an as-reported and organic basis, given the slow start to the year."

The PR firms in CMG are Weber, Golin, DeVries Global, Rogers & Cowan, Creation, and the Axis Agency. The unit also includes marketing specialist firms such as Jack Morton, FutureBrand, and Octagon. CMG reported an organic net revenue increase of 3.9% in the quarter to $315.2 million.

IPG CEO Michael Roth said on an earnings call that he attributes CMG's growth to Weber Shandwick, Golin, and Octagon.

Weber and Golin had particularly strong results in the period, driven by the firms’ models of delivering integrated work focused on earned media. Rogers & Cowan also had success as brands turned to its capabilities in entertainment PR and marketing, said Polansky.

"All of our brands have seen an uptick in new business activity and more are working collaboratively across the group as part of IPG’s open architecture model," he said. "That enables us to deliver different solutions for clients."

IPG’s "open architecture" structure gives clients access to disciplines across its network.

Weber Shandwick, the largest PR firm in the group, saw mid-single-digit growth on an as-reported and organic basis in Q3, compared to a slight organic and as-reported revenue drop in Q3 2017.

"We saw strong performance in Europe and Asia this year in the quarter and for the year," said Polansky. "North America has continued to gain strength as the year has progressed."

Weber had double-digit growth in a dozen markets, including the U.K., India, Japan, Canada, and Mexico, as well as Weber offices in the U.S. China continued to be a strong market for Weber, as well, in 2018, Polansky noted.

"Our chops in technology and healthcare have been a big engine for growth around the world this year," he said of Weber. "Digital and social work represents more than 40% of our revenues."

Interpublic’s Integrated Agency Networks division, which consists mostly of its creative agencies such as McCann, FCB, and MullenLowe Group, reported 5.7% organic revenue growth in the third quarter to $1.5 billion.

The holding company as a whole reported organic net revenue growth of 5.4% in Q3 to $1.9 billion. Operating income in the third quarter was $261.7 million.

In the third quarter of 2018, operating margin on net revenue was 13.8% and adjusted operating margin on net revenue when excluding $11.0 million of transaction costs was 14.4%, compared to 13.9% in 2017.

Broken down by region, organic revenue growth in the quarter was 5% in the U.S. and 6% internationally. Organic revenue was positive in the U.K. (6.8%), Continental Europe (5.8%), Asia-Pacific (7.5%), Latin America (12.4%), and all other markets (1.6%).  

Editor's note: This story was updated with comment from Roth on October 19.

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