• by Steve McClellan  @mp_mcclellan, October 24, 2017

Missing Wall Street earnings expectations, Interpublic Group on Tuesday reported a 1% decrease in third-quarter revenue to $1.9 billion, the firm’s second straight quarter with a revenue decline. Organic revenue was a tepid 0.5%, but slightly better than second-quarter growth.

The company downgraded its organic growth outlook for the year to between 1% and 2% growth. Earlier, it had expected 3%.to 4% organic growth for the year.

Third-quarter net income available to IPG common shareholders was $146.2 million, up 13.6% from a year ago.

For the first nine months of the year, revenue was down 0.7% to $5.54 billion. Organic revenue was up 1.1%. Net income available to IPG common shareholders for the first nine months was down 10% to $262.4 million.

In the third quarter, all of the firm’s organic revenue growth was accounted for in the U.S., where it climbed 1.3%. Internationally, the firm posted a 0.7% organic revenue decline.

January through September, IPG’s organic growth climbed 1.1%, including a 1.6% gain in the U.S. and 0.4% internationally.

IPG CEO Michael Roth emphasized the group’s “strong operating margin expansion” in the third quarter, while “organic revenue was negatively impacted by broader trends that are being felt throughout much of the industry.”

Roth stated the organic growth downgrade was due to “client caution and the macro environment.”

In addition to marketers spending less — particularly in the packaged-goods sector — Roth noted on a conference call with analysts Tuesday morning that some major projects the firm expected clients to proceed with had not yet been given the green light, or were canceled. Those developments “particularly weighed on the growth of our digital and marketing services disciplines,” he said.

Looking a further ahead, added Roth, “as clients return to a growth agenda, which is their only path to sustained valued creation, we expect to see improvement in our organic revenue performance. “

Roth asserted that the firm’s “pipeline of new business opportunities remains strong overall. In addition to pitching and winning new business, we are aggressively cross-selling services, and continuing to deliver on the open architecture, integrated opportunities that have historically been a significant contributor to our growth."

Open architecture refers to the company’s strategy of utilizing experts throughout the organization to service a client’s needs regardless of the particular agency assigned to the account. 

 This story was updated with additional information from an IPG conference call with analysts to discuss third quarter results.