Interpublic Misses Estimates as Ad Spending Slows

Interpublic Group (IPG) has missed analysts' estimates for its fourth-quarter results, as clients in major markets cut back on ad spending. The company reported revenue before billable expenses ("net revenue") of $2.43 billion, a reported decrease of 5.9% compared to the fourth quarter of 2023. The organic decrease of net revenue was 1.8% from the fourth quarter of 2023. IPG's adjusted EBITA before restructuring charges and deal costs was $591.2 million, with a margin of 24.3% on revenue before billable expenses.



IPG's CEO, Philippe Krakowsky, attributed the decline in revenue to a slowdown in ad spending, particularly in the U.S. and Europe. He noted that the company's strong margin result reflected effective operating discipline by IPG's teams, despite the challenges of the past year. Solid new business momentum in the fourth quarter and early 2025 will begin to come online later this year, but it will not offset sizable client losses incurred last year due largely to changes in the media trading environment.

IPG's gains in public relations were offset by its loss of large client accounts such as Verizon, BMW, and Spotify in 2023. The company's employee numbers worldwide also decreased as part of a series of cost-cutting efforts both within the holding and in the wider industry. IPG's recovery strategy also involves keeping up with the increasing adoption of artificial intelligence (AI) in the advertising world since late 2022. The company expected to spend $80 million on AI in 2024, a lower amount than that pledged by competitors Publicis and WPP.



IPG's accelerated business transformation program, announced in February 2025, is designed to enhance its offerings and drive significant structural expense savings. This program includes improving operating efficiencies at several agencies, strategic centralization of many corporate functions, speeding progress on simplification and platforming in both corporate services and certain areas of client delivery, greater offshoring and nearshoring, and further improving real estate efficiency. These efforts are expected to lead to savings of approximately $250 million in calendar 2025, net of reinvestment in advanced capabilities.

IPG's stock price has decreased by 11.73% in the last 52 weeks, reflecting investors' concerns about the company's recent performance. However, the company's long-term prospects remain strong, given its diverse portfolio of agency brands and global presence. As IPG continues to adapt to the evolving advertising landscape, investors should closely monitor the company's progress in executing its transformation program and driving growth in the face of challenging market conditions.