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SEC Filings

10-K
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-K on 02/23/2015
Entire Document
 

Principal Markets
Our agencies are located in over 100 countries, including every significant world market. Our geographic revenue breakdown is listed below.
 
% of Total Revenue
 
2014
 
2013
 
2012
Domestic
55.5
%
 
55.8
%
 
54.7
%
United Kingdom
9.1
%
 
8.0
%
 
8.2
%
Continental Europe
10.7
%
 
11.2
%
 
11.8
%
Asia Pacific
12.2
%
 
12.2
%
 
12.0
%
Latin America
6.2
%
 
6.5
%
 
6.5
%
Other
6.3
%
 
6.3
%
 
6.8
%
For further information regarding revenues and long-lived assets on a geographical basis for each of the last three years, see Note 13 to the Consolidated Financial Statements.

Sources of Revenue
Our revenues are primarily derived from the planning and execution of multi-channel advertising, marketing and communications programs around the world. Our revenues are directly dependent upon the advertising, marketing and corporate communications requirements of our existing clients and our ability to win new clients. Most of our client contracts are individually negotiated and, accordingly, the terms of client engagements and the bases on which we earn commissions and fees vary significantly. As is customary in the industry, our contracts generally provide for termination by either party on relatively short notice, usually 90 days.
Revenues for the creation, planning and placement of advertising are determined primarily on a negotiated fee basis and, to a lesser extent, on a commission basis. Fees are usually calculated to reflect hourly rates plus proportional overhead and a mark-up. Many clients include an incentive compensation component in their total compensation package. This provides added revenue based on achieving mutually agreed-upon qualitative or quantitative metrics within specified time periods. Commissions are earned based on services provided and are usually derived from a percentage or fee over the total cost to complete the assignment. Commissions can also be derived when clients pay us the gross rate billed by media and we pay for media at a lower net rate; the difference is the commission that we earn, which we either retain in full or share with the client depending on the nature of the applicable services agreement.
We also generate revenue in negotiated fees from our public relations, sales promotion, event marketing, sports and entertainment marketing and corporate and brand identity services.
In most of our businesses, our agencies enter into commitments to pay production and media costs on behalf of clients. To the extent possible, we pay production and media charges after we have received funds from our clients. Generally, we act as the client’s agent rather than the primary obligor. In some instances we agree with the provider that we will only be liable to pay the production and media costs after the client has paid us for the charges.
Our revenue is typically lowest in the first quarter and highest in the fourth quarter. This reflects the seasonal spending of our clients, incentives earned at year end on various contracts and project work that is typically completed during the fourth quarter. Fee revenue recognized on a completed contract basis also contributes to the higher seasonal revenues experienced in the fourth quarter because the majority of our contracts end at December 31.
 
Consolidated Revenues for the Three Months Ended
 
2014
 
2013
 
2012
(Amounts in Millions)
 
 
% of Total
 
 
 
% of Total
 
 
 
% of Total
March 31
$
1,637.5

 
21.7%
 
$
1,543.0

 
21.7%
 
$
1,506.8

 
21.7%
June 30
1,851.4

 
24.6%
 
1,756.2

 
24.7%
 
1,715.7

 
24.7%
September 30
1,841.1

 
24.4%
 
1,700.4

 
23.9%
 
1,670.4

 
24.0%
December 31
2,207.1

 
29.3%
 
2,122.7

 
29.7%
 
2,063.3

 
29.6%
 
$
7,537.1

 
 
 
$
7,122.3

 
 
 
$
6,956.2

 
 
See Note 1 to the Consolidated Financial Statements for further information on our revenue recognition accounting policies.


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