IPG CEO Roth Emphasizes “Agnostic” Programmatic Model

ipggDuring Interpublic Group’s (IPG) Q4 and year-end earnings call on Friday, chief Michael Roth emphasized – as he did after Q3 – the holding company’s barter-based programmatic model that discloses margins.

This isn’t the only difference from the black-box models of IPG’s competitors, which deploy programmatic on an agency-by-agency basis.

“We continue to believe that our model of agnostic advice in terms of where clients should be putting their money is the proper model,” Roth told investors. “There’s no question that some of our competitors take inventory positions on their digital assets.”

This ties into the industrywide trend of clients taking programmatic in-house, according to Roth, and multinational clients are taking action due to a lack of trust and transparency around how inventory is purchased.

“I know they can disclose it and they argue that they’re buying more efficiently,” Roth said. “But in terms of pricing, we don’t see that, we don’t do it and we’re very competitive on the pricing side.”

Roth said taking a position in media can result in a big ramp-up of organic growth, but predicted that margins will decrease over time.

Despite Roth’s strong opinions in Q4, he hedged somewhat last quarter, saying that should marketplace perception change, IPG will reconsider its model.

In terms of financials, IPG reported $2.21 billion in Q4 revenue, a 4% increase YoY, and $7.54 billion in FY revenue, up 5.8% YoY. Read the release.

Continental Europe was one hiccup for IPG in 2014. For 2014’s fourth quarter, the effect of foreign currency translation was negative 2.3%. For the full year, the effect was negative 1%.

“We’re not expecting a big recovery in continental Europe,” Roth conceded. “But we’ve made some changes in personnel in continental Europe and we did some acquisitions. We continue to look to bolster our competitiveness there.”

Overall, IPG posted a solid year and outperformed financial projections thanks in part to strong performance from its agencies.

“Looking to 2015, we believe the tone of the business is solid, yet there remains macro uncertainty relating to both the currency environment and Europe,” said Roth. “For 2015, we are therefore targeting 3-4% organic revenue growth, and 80- 100 basis points of operating margin expansion.”

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