IPG, Publicis see organic growth slow

29 April 2009

NEW YORK: Interpublic Group, the US-based advertising holding company, and Publicis Groupe, its French counterpart, both saw organic growth slow in Q1 this year as the economic downturn continued to exert an impact on advertiser spending.

IPG posted an operating loss of $81.9 million (€62.7m; £56.1m) in the first quarter – up from a loss of $57.8m a year ago – with revenues falling by 10.8% to $1.3bn over the same period.

The company reported that US revenues declined by 8.0% to $781.4m on an annual basis in Q1, with international sales also falling by 14.5% to $543.9m.

While this amounted to a loss of 16 cents a share, this was ahead of analysts estimates, which forecast a decline of 20 cents a share and revenue of $1.30bn according to Reuters.

Michael Roth, IPG's chairman/ceo, argued the company has "continued to see the significant effect the global recession is having in demand for marketing services" during what is an "uncertain period."

Overall, the company's operating expenses declined by 8.8% to $1.4bn in Q1, and the holding group has reduced its headcount by 6% over the last two quarters, amounting to around 2,800 jobs.

Publicis, on the other hand, registered an increase in published revenue of 1.3%, to €1.08bn in Q1, but organic growth declined by 4.4% in this period.

European revenues fell by 6.6% to €357m in the first, including drop offs of 4.9% in the UK and 7.4% in France, though central Europe saw an upturn of 14.8%.

North America delivered negative growth of 3.6%, largely due to slowdowns in Korea, Japan and Australia, but was also said to be "resisting better, mainly because of digital activities."

Advertising contributed 38% of revenues, with digital responsible for a further 20.5%, up by nearly 3% year-on-year.

Maurice Levy, the company's chairman/ceo, argued "all available indicators seem to point in the same direction: market direction is much worse than anticipated."

He added that "growth in digital activities and emerging markets has helped to cushion the shock," and that the current results season seems to indicate that the company is "gaining market share".

Omnicom Group posted a 21.2% decline in net income to $164.5m in the first quarter, with WPP seeing revenues fall 11.1% in the same period.

Data sourced from Interpublic Group; additional content by WARC staff