Interpublic Reports Strong Results, Expansion In Mid East, Northern Africa

Interpublic this morning announced strong second quarter results and a major expansion in the Middle East and Northern Africa. The parent company of Initiative and Universal McCann reported revenue of $1.84 billion, an 11.5% increase over the first quarter of 2007. Organic revenue increased 6.3% during the same period.

Interpublic Chairman-CEO Michael Roth attributed the growth to incremental ad spending from existing clients, as well as new business wins, and emphasized that the growth was across all of Interpublic's operating units.

"While the growth that we posted during the first half demonstrates that we have yet to see retrenchment on the part of clients, we will continue to monitor the broader economic situation closely," he stated. "We will also stay very focused on monitoring costs, should action be required in order to protect margins."

Interpublic, which has gone through a protracted period of restructuring related to lingering Sarbanes Oxley compliance issues, formed a task force earlier this year to find greater operating efficiencies among its media services operations - principally Initiative and Universal McCann, and recently promoted Universal McCann chief Nick Brien to president-CEO of a new Mediabrands unit overseeing all of its media services assets.

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Despite efforts to find greater operating efficiencies, Interpublic this morning announced that reported salaries and related expenses rose 9.3% during the second quarter of 2008, and 8.5% during the first half. The company attributed the increase to the support of "business growth resulting in higher base salaries, benefits and temporary help," and said its staff cost ratio actually declined slightly during the quarter and the half.

Interpublic also announced that it has completed a key transaction in the Middle East and North Africa region, increasing its stake in the Middle East Communication Networks from a minority position to 51% ownership. Headquartered in Dubai, MCN is one of the region's top marketing services firms with 60 offices across 14 countries. Terms were not disclosed.

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