IPG Clients Prepare Backup Plans in Case of Economic Downturn

IPG Clients Prepare Backup Plans in Case of Economic Downturn

Published: October 26, 2022

Interpublic Group (IPG), a New York advertising firm, has reported that its organic revenue increased 5.6% year-on-year in the third quarter according to the company’s earnings statement.

Despite that, IPG stated that clients have reached out to them to ask for help creating contingency plans in case of a greater economic downturn.

The group attributed the increase in organic revenue, which is a key measure of agency health, to its digital, data and commerce-related services.

The acquisition of RafterOne, a Salesforce branch for consumer and B2B eCommerce transformation, has also boosted organic revenue substantially.

Due to the upswing in organic revenue, the firm raised expectations for yearly organic growth to a 6.5% to 7% range, showing the same positive outlook that Publicis Groupe and Omnicom Group are displaying.

Such optimistic reports fly in the face of the possibility of a deeper recession that could impact marketing investiture.

Marketing budget cuts usually follow in the footsteps of more serious economic downturns, which is why IPG clients are looking for direction in preparation for such an event.

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Traditionally, digital marketing has seen its performance more closely tied to broader economic health.

Despite a generally positive outlook that IPG has displayed, there are already certain segments, namely R/GA and Huge, struggling to keep up with the failing economy.

“Forward-facing visibility continues to be a challenge given the economic volatility, which doesn’t show signs of letting up,” said IPG CEO Philippe Krakowsky. “The “majority” of IPG’s clients are now asking for help with contingency planning around a downturn, while also seeking strategies that drive sales performance.”

Brands are prepping for the challenges of volatile economic conditions, but that can also include postponing projects for the time being.

“To a lesser degree, we are also seeing some deferrals of digital project work,” added Krakowsky.

Since customers are also invariably battling rising inflation, IPG is investing more in performance ads and studying purchasing behavior. To that end, the acquisition of RafterOne was an incredibly beneficial move.

“Commerce and other forms of business transformation work can be a significant growth driver for us going forward and the addition of RafterOne is an important step in rounding out our offerings in this space,” noted Krakowsky.

In the near future, IPG is likely to focus on prospects that offer a more certain return on ad investment, such as eCommerce.

The company may suggest the same to its clients.

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