Economy Drags On Interpublic's Year-End Results

Interpublic, the parent of Initiative, Universal McCann and other Mediabrands operations, this morning reported a healthy gain for calendar 2008, but declining revenues for the fourth quarter, reflecting the impact of downward economic pressure on demand for the companies advertising and marketing services.

During the fourth quarter, Interpublic's overall revenue declined 4.0% to $1.9 billion, while its organic revenue decreased 2.2% vs. the fourth quarter of 2007.

Interpublic attributed the downturn to the effects of the macro economy, and Chairman-CEO Michael Roth stated that it was actually the "latter part of the fourth quarter and the early part of 2009" that have begun to reflect the negative effects of the broader economy on the industry, a timing that is consistent with past recessions and the so-called "lag effect" on advertising and marketing services. On Tuesday, Rino Scanzoni, the top media buyer at WPP's GroupM unit, predicted that it would take "six to eight months" for the ad industry to respond to an upturn in the general economy.

Interpublic's Roth said it remains "unclear how pronounced or lasting the downturn will be."



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