IPG's Roth Deems Business OK, PR Shops Remain 'Solid'

Michael-Roth-AThe third-quarter financial results for a number of the big holding companies were worse than expected. Two of them, WPP and Publicis Groupe, took the unusual step last month of reporting that October results were somewhat better by comparison.

But when asked at the UBS Media Conference Monday for an October update, Michael Roth, CEO of the Interpublic Group, demurred -- countering that a month’s results was not an accurate indicator of annual performance, upon which company plans are based. “October is not that big a month for us generally,” he added.

Roth did say that the tone of business “right now is okay. There is no indication that we’re falling off a cliff.” He noted that PR companies, with their large volumes of project work are sort of “canaries in a coal mine” when it comes to indicating business status.  So far,  IPG’s PR shops, including Weber Shandwick and GolinHarris, are generating “solid results” in 2012.

As for 2013, Roth said “we don’t see wholesale cutbacks,” based on conversations so far with clients about their spending expectations for next year. He said that many clients and the holding company are currently planning their 2013 budgets. Roth added that the low-single-digit spending growth that forecasters are predicting for next year “is consistent with our dialogue with clients.”

This year has been somewhat challenging for IPG, due to some big client losses such as S.C. Johnson. The company has made up some of that lost ground, he said. Next year, Roth said, “the headwinds [due to client losses] will be less than 3%.”



In addition, the economic standoff in Washington has many companies holding back from making key decisions because “they aren’t sure what the playing field is going to be,” said Roth.

As for the recent CEO shift at McCann World Group -- with Harris Diamond replacing Nick Brien -- Roth stressed that “McCann is not broken. This is not a reset, and we’re not blowing it up and starting all over.” Rather, he said, the change signaled that the shop needs a “business focus on profitability and growth,” which is something Diamond will provide.

McCann is the single biggest revenue and profit contributor to the holding company, Roth noted. “A healthy McCann is a healthy IPG.”

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