NEW YORK: The PR agencies in Interpublic Group’s Constituency Management Group saw a revenue decrease in the high single digits on an organic basis and low double digits on an as reported basis in Q2, said the unit’s chairman and CEO, Andy Polansky.
The numbers, which he attributed to the effects of the COVID-19 pandemic, were in contrast to Q2 2019, when CMG’s PR firms saw low-single-digit revenue growth on both an as-reported and organic basis.
CMG’s PR firms include Weber Shandwick, Golin, DeVries Global, Current Global, and Rogers & Cowan PMK. It also includes marketing specialist firms such as Jack Morton, FutureBrand and Octagon. Other IPG PR firms operate outside CMG.
CMG’s Q2 revenue decreased by 15.6% organically to $267.7 million. The unit’s percentage revenue decline was almost twice as much as IPG’s other reportable segment, Integrated Agency Networks, which saw an 8.8% organic revenue decline to $1.6 billion.
On IPG’s earnings call, EVP and CFO Ellen Johnson said CMG’s steeper decline resulted from drops in the events and sports marketing business. IAN houses creative, data and digital shops including McCann, FCB, MullenLowe and IPG Mediabrands.
Speaking specifically about CMG’s PR shops, Polansky said, “While our agencies are facing the same macroeconomic disruption facing the entire marketing services [industry] due to the pandemic, they continue to outperform the sector.”
He also called out new business including Wavemaker Labs for Golin, PhotoBox for Golin creative agency Brooklyn Brothers and Tata Trusts and addiction nonprofit Shatterproof for Weber Shandwick.
Polansky also pointed to the Ugg and Los Lobos Tequila wins by Rogers & Cowan PMK, expanding client engagements at Current Global and increased pandemic-related work done by Weber management consultancy United Minds.
“North America held up fairly well, but we saw a bit more weakness in Asia generally and China particularly,” Polansky explained. “In terms of sectors, healthcare was a bright spot... I would say food and beverage, financial services and tech clients held up fairly well in this environment, and the pipeline is better now than it was at this time last year, but it is still a very uncertain environment given the pandemic.”
IPG said its headcount declined 4% in Q2 to 52,000, and though Polansky did not supply specific numbers, he said reductions at CMG’s PR firms were likely in the same range. In terms of reducing expenses, the agencies will “continue looking at real-estate footprint and looking at new ways of working.”
For the holding company at large, IPG’s organic net revenue dropped 9.9% in Q2 to $1.85 billion. The company saw a net loss of $45.6 million, including restructuring charges, compared to profit of $169.5 million in Q2 2019.
Organic growth represents change in revenue without accounting for the impact of acquisitions or disposals.