Advertising Age reported IPG plans to prune even more under the guise of restructuring—saving $250 million in the process.
It appears to be the equivalent of desperately losing weight to fit into a bridal gown for an impending wedding.
Except this event will involve disowning and expelling family members from both sides of the aisle—before and after the big ceremony.
And only a select few expect to benefit from prenuptial agreements.
It’s a forced marriage—arranged by greedy old men.
IPG plans $250 million restructuring after quarterly revenue and profit fall
Holding company reports nearly flat organic revenue growth for the year
By Brian Bonilla and Ewan Larkin
Interpublic Group of Cos. CEO Philippe Krakowsky announced a plan Wednesday to save $250 million through restructuring within its agencies and other parts of the company in 2025.
The effort comes as IPG’s fourth-quarter revenue and profit declined. The restructuring includes plans to centralize corporate functions, offshoring and near-shoring in “corporate services and certain areas of client service delivery” and “accelerating progress” in areas such as production and analytics services, Krakowsky said on the holding company’s earnings call. The plan will also include operational and real estate changes for certain agencies.
Krakowksy also made a point to respond to “competitors” who have commented on Omnicom Group’s plan to acquire IPG, which was announced in December.
“While we understand that our competitors are trying to disrupt what we are looking to build, it bears repeating that the integration will remain very focused and not get in the way of the services we deliver to clients every day,” he said.
Krakowsky said that IPG’s $250 million restructuring plan would have “very limited overlap” with Omnicom’s plan to create $750 million in cost synergies detailed last week.
More details of IPG’s plan will be reported in April, said Krakowsky.
When asked if the restructuring would lead to job cuts, the company provided a statement. “The goal is to design and implement the right organizational and operating structure to ensure we remain innovative and competitive,” an IPG spokesman wrote. “This work will change the composition of some teams as we look to invest in talent and technology capabilities in areas such as AI, identity resolution, content management platforms, commerce and data.”
Revenue decline
IPG’s organic net revenue fell 1.8% in the fourth quarter of 2024 and rose 0.2% for the full year. IPG’s annual net revenue, or revenue minus billable expenses, declined 2.3% to nearly $9.19 billion.
IPG expects organic revenue to decline by 1% to 2% in 2025. (Last month, in a filing related to the Omnicom deal, it issued a forecast calling for a 3.7% decline in net revenue this year.)
Krakowksy attributed the fourth-quarter and full-year results to the “impact of account activity” throughout the year. In particular, Krakowsky called out the increased prevalence of principal-based media buying in media reviews.
“We were on the wrong side of the outcome in defending a number of very significant media accounts,” Krakowsky said. “It’s worth reminding everyone that the decisive factor on those largest decisions was principal media, and specifically the commercial terms enabled by principal media at scale.”
He also alluded to a large healthcare loss to a competitor that “was able to leverage its much greater size to win a significant portion of a large creative account that we had been awarded not long prior.”
This likely refers to Publicis picking up a chunk of Pfizer’s creative business last year; IPG declined to comment beyond the earnings report.
No comments:
Post a Comment