Profit Losses Narrow at Interpublic

Ad Company, Like Rivals, Is Optimistic for Year; CEO Roth Voices Support for McCann

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NEW YORK (AdAge.com) -- Interpublic Group of Cos. today reported a slimmer first-quarter income loss on higher revenue, posting earnings of $71.5 million compared to $73.9 million one year ago.

Interpublic, the fourth-largest advertising holding company and home to global marketing and communications networks including McCann Worldgroup, Universal McCann, Weber Shandwick and DraftFCB, reported revenue of $1.34 billion, an increase of 1.2% compared to the first-quarter 2009. The company reported a decrease of 2.9% in organic revenue globally but noted that organic revenue in the U.S. was up 3%.

Michael Roth
Michael Roth
During today's earnings call, Interpublic CEO Michael Roth said the optimistic outlook he had on the company's last earnings call has started to translate into revenue improvement in some markets and industry sectors.

"The first quarter provided additional indications that we have come through the worst of the impact of the economic crisis on our business," Interpublic CEO Michael Roth said during today's earnings call. "Performance this quarter was better than we expected coming into the year and feel increasingly confident about the prospects for growth in 2010. Some client sectors will take longer than others to recover and we will feel the drag of tech and telecommunications for most of the year. But the potential for growth has returned."

Interpublic's agency networks group, which includes McCann Worldgroup, DraftFCB and Mediabrands, generated $1.12 billion in revenue, up 0.4% from $1.11 billion in the year-ago period. And its management group, which houses Weber Shandwick, Jack Morton, Octagon and Golin Harris, increased its revenue 5.4% for the quarter to $221 million from $210 million last year.

The big story for Interpublic so far this year has been the turmoil at McCann. When new global chief Nick Brien officially took over on April 1, he immediately faced trying to keep business from walking out the door, from Goodyear ending its four-year relationship to the loss of its massive Verizon Wireless account to McGarryBowen. The longtime telecom client is reviewing the McCann-managed Fios account as well. All told that could result in $30 million in billings walking out the door.

The trouble for McCann doesn't end there: Longtime client L'Oréal, which just awarded Interpublic's Universal McCann its consolidated $700 million U.S. buying account, has been rumored to be chatting with other creative agencies.

"McCann Worldgroup and McCann North America continue to be very strong competitors in the marketplace," Mr. Roth said. "One of the interesting things about McCann is that they have a very strong existing client base so a number of improvements we are seeing in our company aren't necessarily from new wins but increases from existing clients, which is the base of the McCann Worldgroup. ... We're very confident that the McCann Group is going to be a strong contributor to IPG's success."

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