Interpublic Group’s fourth-quarter profit and revenue declined in its latest quarterly update and forecasts revenue will marginally decline in 2025. The world’s fourth largest advertising holding company has agreed to a sale to Omnicom.
Interpublic Group’s organic revenue remained flat in the 2024 calendar year after reporting a decline in the final quarter of 2024.
The group, which agreed a sale to Omnicom last year that is subject to regulatory approval, revealed that it plans to save $250 million through restructuring within its agencies and other parts of the company in 2025.
IPG’s organic net revenue declined by 1.8 per cent in the fourth quarter of 2024, and increased marginally by 0.2 per cent in 2024.
The holding company’s annual net revenue, which doesn’t include billable expenses, dropped by 2.3 per cent per cent to $9.2 billion (A$14.6 billion).
IPG global CEO Philippe Krakowsky, pictured above, said that the outlook for 2025 is for a further revenue decrease.
“Solid new business momentum in the fourth quarter and early 2025 will begin to come online later this year, though it will not offset sizeable client losses incurred last year due largely to changes in the media trading environment. Factoring in those headwinds, and with the benefit of otherwise sound underlying performance, we are forecasting an organic decrease in revenue for the full year of 1 per cent to 2 per cent,” he said.
“Given the rapid and ongoing evolution of our industry, we will be undertaking a program of accelerated business transformation this year, designed to enhance our offerings and drive significant structural expense savings. This blueprint includes improving operating efficiencies at a number of our agencies, strategic centralisation of many corporate functions, speeding our progress on simplification and platforming in both corporate services and certain areas of client delivery, greater offshoring and nearshoring, as well as further improving real estate efficiency.”
In 2024, IPG lost one of its largest clients in Amazon, which shifted its primary media business to WPP and Omnicom. IPG will still work with Amazon as its media partner on some of its brands, such as Amazon Ads and Amazon Web Services. Another notable media client move was Lego, which left IPG’s Initiative to partner with Publicis One.
The holding company recently sold its creative consultancy Huge and has put up its digital design and advertising agency, R/GA, up for sale.
Krakowsky said the restructuring programme would lead to $250 million in savings in 2025.
These actions allow us to target an adjusted EBITA margin for 2025 of 16.6 per cent, despite the revenue challenges we are facing,” he added. “We expect the significant return on these efforts will advance Interpublic’s go-forward standalone capabilities, and, further, allow us to become a part of the new Omnicom as the strongest possible company. It also bears mention that the benefits of this restructuring have limited overlap with the cost synergies identified as part of the Omnicom acquisition.
“We believe the proposed acquisition will result in the industry’s most dynamic and well-resourced company.”
Meanwhile, Omnicom recently reported that its global revenue increased by 6.8 per cent to $15.7 billion (A$25.1 billion), while organic revenues increased by 5.2 per cent in Q4 and the 2024 calendar year.
