Oct 28, 2009 at 10:23 PM
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IPG: Octagon Sees Q3 Growth, 'Modernizing the Event Business'

Global advertising firm Interpublic Group (IPG) reported disappointing Q3 results earned $17.2 million, in the period, down from $38.7 million, on revenue of $1.43 billion, an 18% drop.

Results aside, Interpublic CEO Michael Roth seemed bullish on event marketing, and in response to one analyst's question on measurement of which, Roth specifically talks about how they're modernizing the business. Here's what Roth had to say on the call...

  • We were hurt by reductions in scope and certain lost assignments in the text sector including projects in our event business that did not recur this year as well as the unprecedented challenges being faced by the automotive industry. Also, the fact that we posted a very strong Q3 last year posed difficult comparisons.
  • Given the macro environment it’s worth noting that some client sectors have held up well in Q3, such as fruit and beverage, consumer packaged goods and retailing.
  • We've also begun to see an increase in new business activity which earlier this year had essentially ground to a halt in many world markets. Though this isn’t the definitive indicator of an advertising recovery, it certainly is an encouraging sign. We’re equally pleased that a review of all major industry pitches over the past year, shows that not only are we being included in every significant opportunity out there in which are not blocked due to client conflict, we are also winning at a broad cross section of our agencies.
  • We were also pleased with the performance of our sports marketing agency Octagon which had growth in the quarter.
  • Q&A between Credit Suisse analyst & Roth
    Q/Peter Stabler - Credit SuisseWanted to have the question about the event business, clearly it's an area that is under-performing across the entire peer group… and the Octagon quarter results not withstanding, do you think there is any reason to believe that the long-term prospects for this business have dimmed. My understanding is that it's often a difficult aspect of marketing to measure a return on investment and I am wondering whether you’re sensing any sort or dimming of enthusiasm for the event marketing business.

    A/Michael RothNo. Not at all I think, frankly one is a reality aspect of it. It’s the easiest thing to turn off. So when people were cutting back, it was easy to cut the events and certainly the environment didn’t help where everyone was looking at events as somewhat of a negative thing to do. I think we're starting to see that turn. I think there is no question that there is a place in any marketing service program for events. It has a real impact. I think we can show that it moves the needle and clients certainly embrace it in terms of the opportunity.

    For example in the automotive business, there is nothing more important than getting someone in the car and experiencing it. So I think that part of the business will continue and it continues to serve a very important part. And frankly the tone is improving in that business and we are starting to have more dialogue. It may be just the timing issue between 2009 and 2010, but I believe that business and we have among the best in class between Jack Morton and Momentum.

    I think we have great resources and the fact that we're modernizing the event business. It use to be that when you look at the event business, all we were doing was one particular event and it was the mechanical aspect of the event that was driving the business. In today’s world we combine digital offerings with the event offering and we make it an integrated offering with PR Digital, the event business and all the different marketing services. So we're not just talking about, it's not your old event business right now, it’s a much more modern approach to it and I think these are real place for us in the marketplace.

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