NEW YORK -- Interpublic Group of Cos. Inc. on Tuesday said it would defend its advertising account with General Motors, which has put its $2.8 billion U.S. ad-buying business up for review.
The world's No. 3 advertising group is being forced to fight for the account as it also faces a potential restatement of financial results. GM is Interpublic's largest client and its media-buying account represents as much as $70 million in annual revenue for the advertising company, which has posted seven straight quarters of losses.
Interpublic said it believes it can successfully retain the account with GM, as it did with GM's European media-buying account last year.
"Given the concern that the announcement of the U.S. review has created in the financial markets, it bears mention that the revenue associated with the assignment in question represents less than 1 percent of our global revenue," Interpublic Chairman and Chief Executive Michael Roth said in a statement.
Interpublic had total revenue of $5.86 billion in 2003 and is projected to post revenue of about $6.14 billion for 2004, according to forecasts by analysts polled by Reuters Estimates.
J.P. Morgan analyst Frederick Searby in a research note said that a loss of the GM account would be "quite a blow" to Interpublic.
"The major question mark is whether (Interpublic's) financial issues are impacting its ability to win new accounts as well as maintain its current accounts," he said.
The advertising company, which is under review by the U.S. Securities and Exchange Commission for a 2002 restatement of several years worth of earnings, last week said it would delay its 2004 annual report and indicated it may again restate prior results.
GM's total business with Interpublic, which also includes creative services as well as the European business, accounted for 8.3 percent of Interpublic's revenue in 2003, said Paul Ginocchio, an analyst at Deutsche Bank.
GM said it had put its advertising buying business up for bids in order to cut costs and respond to the changing advertising landscape.
Interpublic is in the midst of a restructuring, including management changes at several key agencies.
Also on Tuesday, Interpublic's Universal McCann media buying and planning firm confirmed it had moved Chief Executive Robin Kent out of the top job. Kent will take on special Interpublic media projects, while Chief Operating Officer Murray Dudgeon will become interim CEO.
GM, one of the largest U.S. advertisers, has been losing U.S. market share to foreign rivals led by Toyota Motor Corp. GM spent $2.8 billion last year on advertising in media tracked by TNS Media Intelligence, a provider of advertising and marketing information.
A GM spokeswoman said the company sent a letter last week to Starcom Mediavest, a unit of France's Publicis Groupe, inviting it to compete for the business currently done by the Interpublic units General Motors Mediaworks and LCI.
GM expects to make a decision on its ad buying business within two months.