(Reuters) -Advertising group Interpublic missed Wall Street estimates for third-quarter revenue and profit on Friday, as spending from its technology and telecom clients was muted, sending its shares down more than 2%.
An uncertain economy has prompted most tech firms to curb their marketing budgets, leading to an uneven recovery in the ad market, even as media and healthcare companies continued to spend on promotions.
“Revenue performance did not measure up to expectations,” CEO Philippe Krakowsky said, adding that concerns over the economy were delaying projects and slowing the addition of new clients.
The conflict in the Middle East will have some business implications, Krakowsky said on a post-earnings call.
The maker of ad campaigns for the likes of Google and Samsung posted net revenue of $2.31 billion, missing estimates of $2.38 billion, according to LSEG data. Its earnings of 70 cents per share also fell short of expectations for 73 cents per share.
Interpublic blamed some of the weakness on its digital ad business, which is managed by agencies such as R/GA and Huge that rely heavily on tech and telecom clients.
The company has the second-largest exposure among ad agencies to tech and telecom sectors, which represented 15% of the 2022 net revenue generated by its top 500 clients, based on estimates from MoffettNathanson analysts.
The results were in contrast to those of U.S. rival Omnicom and France’s Publicis, both of which topped quarterly earnings expectations earlier this month.
Interpublic, which also owns McCann, Mediabrands and MullenLowe, said it expected organic growth of around 1% in the fourth quarter and was on track to deliver on its margin goal of 16.7% for the year.
(Reporting by Samrhitha Arunasalam in Bengaluru; editing by Milla Nissi and Anil D’Silva)