Digital agencies weigh on IPG, work ongoing
At IPG, strong performance in the media, healthcare, and data-informed practices were offset by multiple factors such as the macro environment, softness in its specialist digital agencies, such as R/GA and Huge, and softness in the technology and telecommunications sectors, CEO Philippe Krakowsky said on a conference call.
Specifically Huge and R/GA’s impact on organic revenue was a “hair under 3%” Krakowsky told analysts during the call. “As we’ve called out in our recent conversations with you, the performance of our digital specialist agencies continued to weigh on growth in the first quarter. The transformation underway at those businesses does continue to progress, and we will begin to cycle their revenue decreases in our third quarter.”
Krakowsky said he expects both Huge and R/GA to be “growth drivers” for the holding company at some point.
“Huge is further along in terms of what the next value proposition is going to be for them,” Krakowsky said. “Essentially it’s going to market with more of a consultative model where it’s less people and hours and more of a product and solutions approach.”
Recent news: Huge lays off 6% of staff
Krakowsky said the first-quarter results were in line with what the company had forecast coming into the year, but revenue “is not in keeping with our long-term track record or the growth we are collectively striving to achieve.”
IPG should begin to see the benefits of its key new business wins, most notably Geico’s media account going to Mediabrands, in the second half of the year, he said. The holding company also continues to make investments in emerging technology such as Web3 and AI.
