Interpublic Group slashes growth outlook as tech business stumbles

Interpublic Group of Companies (IPG) was the worst-performing stock in the S&P 500 after the global ad agency slashed its forecast for organic revenue growth for 2023 as businesses at tech companies slumped.

IPG now expects full-year organic revenue to grow 1% to 2%, down from its previous estimate of a 2% to 4% gain.

CEO Philippe Krakowsky explained that in the second quarter, the company experienced “the same bets and takes on revenue” that have occurred since the start of the year. He said that among the company’s client sectors, technology “continued to weigh specifically on growth.” He added that “macro uncertainty” was affecting some of IPG’s specialist assets and traditional consumer agencies.

In the second quarter, the company reported that its total revenue fell 2.5% to $2.67 billion. Organic revenue fell by 1.7%. Krakowsky said this was “inconsistent with our expectations and track record of strong long-term growth.”

However, I noticed that new business performance was exceptionally strong. He argued that the strength of IPG’s offerings, underpinned by its core data and technology infrastructure, “will provide strong tailwinds as we enter the second half of this year and even more so in 2024.”

Shares of IPG had already fallen two days ago after rival Omnicom Group (OMC) reported weak quarterly results. Friday’s more than 13% drop put the stock in negative territory for the year.