• by David Goetzl  @dgoetzl, July 28, 2009

Investors sent shares in Interpublic Group tumbling close to 13% Tuesday in reaction to second-quarter results that yielded a 76% drop in profits. In addition, revenue fell about 20%, although the company attributed that to a comparison with a strong quarter a year ago.

While the $370 million revenue drop -- to $1.47 billion -- may be a sign that the global ad market's slump could continue for some time, more telling might be comments from IPG CEO Michael Roth, who spoke on a conference call Tuesday to discuss second-quarter performance.

"Clients continue to be cautious" in spending, he said. June was a weaker month for IPG compared to a year ago than either April or May -- although he did not provide specifics.

U.S. revenue for the April-June period dropped 14.5% to $847 million, while global organic revenue fell at the same 14.5% rate. Investors, however, may have been mostly concerned with the crushing earnings decline from $88.1 million to $20.9 million.

IPG shares dropped 12.6% to $5.41. Shares in Omnicom, WPP and Publicis also fell, although none more than 2.2% -- a sign that investors may have soured on IPG and not necessarily the sector.

Roth said that reasons for the revenue drops include declines in both the event marketing business, where IPG owns Jack Morton Worldwide, and the auto sector, where the company works for GM. The two contributed about 4% of overall organic revenue decline.

A bright spot, however, came in regard to GM. IPG had said its balance sheet could be affected by GM's bankruptcy to the tune of some $50 million, but the impact has been negligible. GM is apparently paying its bills in full.

Still, IPG has been trying to cut costs. Spending on salaries and related costs, excluding severance payments, was down nearly 10% in the second quarter. But Roth reiterated what IPG has conveyed before: There is only so much trimming in personnel costs that can be done without hurting business significantly.

Roth said it is "not advisable in the service business to take out costs on pace with the level of revenue decline we saw in the second quarter, without risking a deterioration in the talent base and the quality of service we deliver to clients."

Total company expenses for incentive compensation were cut by over 35% in the second quarter, while temporary labor expenses were down about 30%.