- Interpublic helps its customers understand their return on investment in advertising
- This has helped it to gain market share
- Its shares have doubled over the past three years
Heather Peirce, director of global equities at Black Creek Investment Management, one of the companies which runs Alliance Trust's (ATST) investment portfolio, explains why she invests in Interpublic (0JCK).
“Interpublic Group, an advertising company, has been one of our most successful names over the past three years. It is a leader in the digitisation trend – the automation and digitisation of helping customers understand their media and advertising budgets.
“Many of us consume advertising and media on a daily basis, but we can take for granted the digitalisation of the industry and how it has influenced this sector. For example, you can have an advertisement change on a billboard within seconds. But there is much better understanding now of how companies are investing for the future and building their brands.
“What makes Interpublic unique is its open architecture, both in its media brands and teams. Its goal is to help its customers find the best way to advertise and build brands, and achieve their goals. Several years ago, the company purchased Axiom Software Solutions, a global information technology, consulting and outsourcing company and services provider. This brought on board many data scientists who helped enable Interpublic's customers to have a far better understanding of their return on investment when it comes to advertising. Interpublic now has some of the best talent in the industry.
“The company has been able to outgrow its peer groups consistently year after year. When we purchased this business it was very much a contrarian idea because people believed that digitalisation would result in the death of old-style media, and companies such as Google and Facebook would take over in this area. What has actually happened is that companies like Interpublic have continued to gain share because of their ability to demonstrate return on investment for their customers.
“Interpublic also gets around a quarter of its revenues from healthcare, from agencies who work with clients in that sector. This focus also continues to demonstrate very strong above-industry growth and Interpublic has unique talents in that area that have enabled it to outgrow its peers over the past five years.
“We purchased Interpublic’s US-listed shares during the Covid-19 pandemic period when they traded as low as $14 (£11.12) per share, but since then it has at times traded at over $35. So it’s been one of our strongest performers and carries one of our largest expected internal rates of return.”
