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Marketer Caution Impacts Interpublic's Results

October 26, 2012

Interpublic Group, bitten by marketer caution felt throughout the industry, saw its revenue and net income decline in the third quarter and first nine months of the year.

For the quarter, revenue dipped 3 percent to $1.67 billion from the same period last year. At the same time, net income fell to $68.7 million from $208.1 million in Q3 2011.

The dropoffs were less steep for the first nine months, when total revenue declined 1 percent to $4.89 billion and net income slid to $121.8 million from $261.7 million in the like period last year.

On an organic basis, revenue also declined, albeit less than 1 percent in both the quarter and first nine months.

IPG CEO Michael Roth attributed the downward trend to marketers pulling back on spending, account losses and challenging comparisons, as the holding company's results in Q3 2011 were relatively strong.

"This year has proven to be more challenging on the revenue front than anticipated, but we continue to manage the business effectively and will deliver increased full-year profitability relative to 2011," Roth said in a statement. "With full-year 2012 organic revenue growth of at least 1 percent and a continued focus on costs, our target of a 50 basis point improvement in our operating margin remains attainable."

Rival holding company bosses, including WPP Group's Martin Sorrell and Publicis Groupe's Maurice Lévy, also cited marketer caution in their earnings reports this week. 

In a statement this morning, Lévy said that "since the end of the summer, (European) advertisers have increasingly adopted a wait and see attitude, canceling or postponing campaigns." He added, however, that the situation in the rest of the world is "somewhat better."

For both the quarter and first nine months, Publicis Groupe's organic revenue climbed a modest 2 percent.  

Like Roth, Lévy also stressed the importance of managing costs in such conditions, which are expected to continue in the fourth quarter.

"In the face of lackluster markets, advertisers' cautious attitude and the fragile economic situation in Europe, we must exercise the greatest prudence in managing our operating costs," Lévy said.



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