IPG Narrows Loss on Flat Revenue

NEW YORK Interpublic Group today reported a net loss of $31.7 million for 2006, as revenue fell 1 percent to $6.19 billion.The loss represented a significant improvement over IPG's net loss of nearly $263 million for 2005. Still, the holding company ended the year slightly more than half as big as Omnicom Group, which claims $11.4 billion in revenue, and WPP Group, with about $11 billion.IPG still ranks ahead of No. 4 holding company Publicis Groupe, which ended last year at $5.78 billion in revenue, based on today's rate of exchange.IPG attributed the year-to-year loss in part to $34.5 million in "restructuring and other reorganization-related charges" related primarily to severance and real estate costs stemming from the merger of Draft and Foote, Cone & Belding and the realignment of the holding company's media operations.For the fourth quarter, IPG reported net income of $69 million, up substantially from a net loss of nearly $23 million in the same period of 2005. Revenue for the quarter, however, declined 1 percent, to $1.9 billion.On an organic basis, IPG grew a meager 0.4 percent for the fourth quarter and 1 percent for all of 2006. IPG CEO Michael Roth cited the organic figures as signs IPG has begun to turn itself around."Achieving organic growth for the full year is significant in light of the revenue deficit created by 2005 losses. This underlying growth demonstrates the competitive vitality of our agencies," said Roth, in a statement. "We are also beginning to see the benefits of key corporate initiatives that have put us on track to be fully Sarbanes Oxley compliant in 2007 and to meet our turnaround margin objectives for 2008."IPG has vowed by the end of 2008 to achieve peer-level revenue growth and boost its operating margin into double digits. The company ended last year with a margin of -1.7 percent.Roth and IPG CFO Frank Mergenthaler further discussed the numbers with industry analysts during a morning conference call that.Roth said that the organic growth stemmed from wins at McCann Erickson, DraftFCB and Lowe as well as units of IPG's Constituency Management Group, which includes Weber Shandwick, MWW Group, FutureBrand, DeVries, Golin Harris, Jack Morton and Octagon. "Every one of our [CMG] units made contributions, with particular strength in PR and signs of real recovery in the corporate identity section," added Roth.About 58 percent of IPG's $6.1 billion in revenue now comes from advertising and media buying, while the remaining 42 percent is derived from marketing communications, according to Mergenthaler. IPG is striving to achieve a 50/50 mix.

Brand Marketing

IPG Narrows Loss on Flat Revenue

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