The Interpublic Group of agencies generated 2008 revenue of $6.96 billion, up from $6.55 billion in 2007. The Group’s 2008 net income was $295 million, compared with $167.6 million a year earlier. The year ended Dec. 31.
U.S. revenue for 2008 was $3.79 billion, up 3.7% from the $3.65 billion generated domestically in 2007. International revenue was $3.18 billion, a 9.4% jump from the $2.9 billion pulled in a year ago.
Part of the international increase was due to the third-quarter acquisition of a Middle Eastern agency (the Middle East Communications Network). Organic growth internationally was 4.6%, compared with 3.21% domestically.
According to a transcript of a conference call with analysts, international results varied by region. In the U.K., where the currency effect on reported revenue was dramatic, revenue decreased 3.5% organically. In continental Europe, the organic decrease was 4%, due to generally lower spending from existing clients in the region, which offset a solid performance in France and Spain.
In the Asia Pacific region, organic revenue decreased slightly. The company had growth in China and India, but at lower rates than earlier in the year. That was offset by continued decreases in other markets, notably Australia.
In Latin America, organic revenue growth was 12%, led by increases at Draftfcb, Lowe and Mediabrands, due to both higher spending from existing clients and net new business. Interpublic’s other markets increased 18.8% as due to the Middle Eastern agency acquisition, but decreased 5.2% organically.
Within Interpublic Group’s two main operating groups, the Integrated Agency Networks, which include McCann; Draftfcb; Lowe; Mediabrands and domestic agencies, had the greater growth, but this was partly due to acquisition. This groups’ total growth was $5.87 billion, 6.6% over 2007’s level. But its organic growth was only 3.4%.
The Constituency Management Group, which includes public relations agencies Weber Shandwick; GolinHarris and other marketing service organizations, pulled in $1.09 billion, a 4.1% increase from 2007. But organic growth within this unit was 6.2%.
The company’s top 100 clients accounted for 55% of the firm’s revenue. During 2008, 25% of the revenue from this group of clients was from tech and telecom firms. Health and personal care made up 19%, auto and transportation accounted for 13%, and food and beverage was 12%. Packaged goods and financial services accounted for 8% each, retail generated 6%, with the remaining 9% coming from “other”.
These figures were more or less in line with 2007 – automotive, tech and telecom and food and beverage dipped slightly, and retail and financial services were up.
The Eavesdropper’s Take: During Interpublic Group’s earnings call, Chairman and CEO was reluctant to project 2009 revenue, but felt that if the company could keep declines to within 2%-3%, it could maintain margins. Roth also addressed what he called “the elephant in the room” – the company’s work with General Motors, which on Thursday announced independent auditors had concerns about its ability to survive without going into Chapter 11 restructuring. “Our total exposure to General Motors, including our work in progress, is roughly $150 million,” Roth told listeners.
