September 21, 2023

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IPG lowers 2023 guidance | Ad Age Agency News

The digital shops mentioned consist of R/GA and Huge, both of which are in the midst of a “turnaround,” he said. R/GA recently picked up an agency of record opportunity with Intuit TurboTax and Huge is using AI tools to revamp its business.

Tech clients made up 15% of IPG’s net revenue last year and now comprise 12%, Krakowsky said. IPG saw strong growth in its media offerings and the healthcare sector as well as “solid growth” in its PR and experiential offerings, the CEO said.

Staffing dips

IPG’s total headcount decreased by 1.2% through the first half of the year. It’s unclear if the drop in the number of employees was due to an increase in layoffs but Krakowsky mentioned severance expense increased in underperforming parts of the business.

“Expense for severance was elevated in the quarter as we continue to address areas of the business where performance is lagging, as well as further accelerate business transformation and integrate delivery of services in our very strong media offering,” Krakowsky said this morning. “We’ll see the benefit to margin of those actions going forward.”

IPG’s current headcount is 58,000 employees, a spokesman said. IPG employed about 58,400 people at the end of 2022, according to the company’s annual filing.

Severance expense was 1.7% of net revenue which is “somewhat elevated” from typical levels according to IPG VP and Chief Financial Officer Ellen Johnson, who said severance expense was 50 basis points, or 0.5%, this time last year. In the first quarter of 2023, severance expense was 1.5% of net revenue. 

“Our actions in the second quarter reflect steps to recalibrate the more traditional areas of the business where performance is lagging as well as to accelerate business transformation in our high-performing media verticals,” Johnson added.


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