New York (AdAge.com) -- Interpublic Group of Cos. today gave the first time frame for its turnaround process since last year?s earnings restatements, saying it hopes to improve organic revenue growth and profitability by 2008.
|IPG chairman Michael Roth hopes to improve organic revenue growth and profitability by 2008.|
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Speaking at Interpublic?s much-awaited Investor Day, Chairman-CEO Michael Roth stressed the need to improve operating margins to compete with those of its rivals. The third-largest holding company, troubled by a host of financial and operational difficulties, has seen its growth and profits ravaged by costs of righting historic accounting issues and by client losses.
Hitting those goals means moving from a 2005 loss to 10% operating margins and 6.5% organic growth. Interpublic puts peer-group margins at 14%.
Lowe to eliminate offices
The company also addressed the issues at one of its most troubled agencies, Lowe Worldwide, its third-largest ad agency network. Recently appointed Lowe CEO Steve Gatfield said the agency would eliminate a number of offices, shedding a number of majority-owned offices and affiliates. He said Lowe would move from 37 majority-owned offices to 19, including eight key hubs.
Mr. Gatfield also said the agency had to get beyond an ?ad-centric? model and bring in better channel-planning and analytics capabilities, as well as collaboration with other Interpublic agencies.
?The bad news of Lowe is that it has essentially stood in its place for many years as an advertising agency,? said Tony Wright, Lowe's chairman. ?It didn?t have an integrated offering.?
Messrs. Gatfield, Roth and a number of agency chiefs, from McCann Worldgroup and FCB to R/GA and Draft, addressed the more than 300 investors and analysts gathered at the Puck Building in Manhattan?s SoHo neighborhood.
Highly scripted affair
The highly scripted affair -- loaded with agency-credentials presentations and marketing lessons that amounted to Consumer Control 101 -- was hotly anticipated as many observers who have thirsted for Interpublic?s latest turnaround plan, in the wake of last year?s accounting issues. The event, however, left some onlookers wanting more detail on the agencies and the state of the holding company.
?It?s a nice event -- it?s good to get to see more of the executives. But the actual amount of incremental financial data isn?t much, so far,? said Fred Searby, VP, JPMorgan, after hearing the morning portion. ?They?ve had a lot of these concepts around for awhile -- the need for talent and collaboration.?
Michael Nathanson, global media analyst at Sanford C. Bernstein, seconded that. ?I need more financial detail,? he said. ?I want to know how deep the financial problems are at Lowe and I want more data on McCann. And I want an example of a media pitch where they?ve won and how they won it.?
Interpublic stock closed today at $10.05, down 39 cents or 3.7% on moderate volume. The stock slumped at the opening bell and continued to drift lower as today's presentations continued, closing at its lowest price of the day.