Interpublic CEO Michael Roth said the year has proved to be a
bigger challenge than expected on the revenue front, but noted the
company is managing its business in a way that will eek out revenue
growth for the full year. He also pointed out that Interpublic is
not alone in facing challenges, as peers including WPP and Publicis
also recently reported disappointing results.
"These results reflect greater caution on the part of our
clients, particularly in September, headwinds from 2011 losses, and
extremely challenging third quarter comparisons," said Mr. Roth.
"As you recall, our industry-leading growth of 8.7% in last year's
third quarter was driven by 10% growth in the U.S. and benefited
from a revenue shift of $26 million from Q2 into Q3." He added that
the company continues to see the impact from last year's account
losses, "which was 2.5% in the quarter, most notably in the
consumer goods sector. And in the U.S. that number was
Mr. Roth pointed out the bright spots in the U.S., which are its
media business, MediaBrands, digital agencies such as Huge and R/GA
and the marketing-services agencies in its Constituency Management
Group division, particularly PR firms Weber Shandwick and Golin
Harris. He added that the financial and auto industry accounts are
continuing to grow, while noting that , as in second quarter,
"softness" persists in the retail and pharmaceutical sectors.
DraftFCB has made progress in replacing revenue from large
client loses like SC Johnson, he said, and the agency is
"developing its offering in digital and marketing services and
effectively managing costs. ... Lowe continues to build on its
leadership position with Unilever and as a top creative network
focused on emerging markets."
Interpublic in the third quarter of last year saw a pre-tax gain
of $132.2 million from its August sale of about half of its small
stake in Facebook.