Interpublic Group reported higher-than-expected third-quarter profit but joined other advertising-holding companies in warning that the financial crisis is impairing ad budgets around the globe."We're seeing [the financial crisis] beginning to weigh on marketers' plans for both the fourth quarter and 2009," said Michael Roth, Interpublic's chief executive. He added that there have been cancellations in the fourth quarter, with particular weakness in spending by financial-services companies and auto makers.
Interpublic rivals Omnicom Group and Publicis Groupe have expressed similar concerns. Maurice Levy, Publicis' chief executive, said Tuesday that he believed the ad industry will face a "difficult end of 2008 and a marked slowdown in 2009." Last week, Omnicom said retail and automotive clients were beginning to push back and even cancel some fourth-quarter ad plans.
Wall Street analysts and ad forecasters are divided on just how low U.S. ad spending will sink in 2009. John Janedis, an analyst at Wachovia, predicts U.S. ad spending will fall 0.8% next year while UBS media analyst Michael Morris suggests ad spending will plunge 6%.
Interpublic, which owns ad firms such as McCann-Erickson and DraftFCB, reported net income of $45.7 million, or eight cents a share, compared with a net loss of $21.9 million, or six cents a share, a year earlier. Third-quarter revenue rose 12% to $1.74 billion, while organic revenue -- a closely watched industry benchmark that excludes the impact of foreign-currency moves and recent acquisitions -- rose 7.6%.
