Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help you understand The Interpublic Group of Companies, Inc. and subsidiaries (the "Company", "Interpublic", "we", "us" or "our"). MD&A should be read in conjunction with our unaudited Consolidated Financial Statements and the accompanying notes included in this report and in the 2007 Annual Report on Form 10-K, as well as our reports on Form 8-K and other SEC filings. Our MD&A includes the following sections:

EXECUTIVE SUMMARY provides an overview of our results of operations.

RESULTS OF OPERATIONS provides an analysis of the consolidated and segment results of operations for the periods presented.

LIQUIDITY AND CAPITAL RESOURCES provides an overview of our cash flows, funding requirements, financing and sources of funds.

CRITICAL ACCOUNTING ESTIMATES provides an update to the discussion of our accounting policies that require critical judgment, assumptions and estimates in our 2007 Annual Report on Form 10-K.

RECENT ACCOUNTING STANDARDS, by reference to Note 13 to the unaudited Consolidated Financial Statements, provides a discussion of accounting standards that we have not yet been required to implement, but which may affect us in the future.

EXECUTIVE SUMMARY

We are one of the world's premier advertising and marketing services companies. We generate sales, earnings and cash flows from our agency brands delivering custom marketing solutions to many of the world's largest marketers. Our companies cover the spectrum of marketing disciplines and specialties, from consumer advertising and direct marketing to mobile and search engine marketing. Major global brands include Draftfcb, FutureBrand, GolinHarris International, Initiative, Jack Morton Worldwide, Lowe Worldwide ("Lowe"), MAGNA Global, McCann Erickson, Momentum, MRM, Octagon, Universal McCann and Weber Shandwick. Leading domestic brands include Campbell-Ewald, Carmichael Lynch, Deutsch, Hill Holliday, Mullen and The Martin Agency.

We are in the third year of our turnaround plan. During the first two years of this plan we strengthened our leadership teams throughout the Company, strategically realigned certain key operating units, enhanced our liquidity and financial flexibility, remediated all of our material weaknesses within our internal control structure and significantly improved financial performance. In the third year of this plan, we continue to execute on our objective of improving our organic revenue growth and operating margins, with our ultimate objective to be competitive with our industry peer group on both measures. Key components of this strategy are our continued focus on talent and tools, cost control, utilization of resources and regular refinement of our professional offerings so that they can meet their clients' needs and our commercial objectives.

For the remainder of 2008 and beyond, we expect to continue to make investments in talent and to expand in high-growth advertising and marketing disciplines, especially digital, and in high-growth markets around the world. Technology has accelerated the pace of change of consumer media habits, including the variety and capabilities of media in use. In this evolving environment, we are constantly taking advantage of opportunities to improve service to our clients. We are integrating advertising and marketing campaigns across multiple media platforms, increasing the accountability of client marketing programs and building digital expertise across all disciplines.

As part of our long-term business strategy and to strengthen our competitive position in the marketplace, we continue to evaluate strategic opportunities to grow through acquisition and investment. We select companies with quality management

Management's Discussion and Analysis of Financial Condition and Results of Operations - (continued)

teams and outstanding capabilities that will enhance our service offerings to our existing clients, increase our presence in high-growth markets and/or enhance our ability to attract new clients. We are interested in companies that will complement the service of our existing agencies or allow us to provide new services to our clients.

The continuing uncertainty in the worldwide financial system has negatively impacted general business conditions. It is possible that a weakening economy could adversely affect our clients' need for advertising and marketing services, or even their solvency, but we cannot predict whether or to what extent this will occur. We are not dependent on short-term funding, and the limited availability of credit in the market has not affected our credit facilities, including our ELF facility, or our liquidity or materially impacted our funding costs. As of September 30, 2008, approximately 85% of our debt obligations bore interest at fixed rates. We have diversified counterparties and clients, but we continue to monitor our counterparty and client risks closely. While the effects of the economic conditions in the future are not predictable, we believe our global presence, the breadth and diversity of our service offerings and our enhanced expense management capabilities position us well in a slower economic climate.

We analyze period-to-period changes in our operating performance by determining the portion of the change that is attributable to foreign currency rates and the change attributable to the net effect of acquisitions and divestitures, with the remainder considered to be the organic change. For purposes of analyzing this change, acquisitions and divestitures are treated as if they occurred on the first day of the quarter during which the transaction occurred.

On July 9, 2008 we announced the creation of a management entity called Mediabrands to oversee our media assets that are included in our Integrated Agency Networks ("IAN") segment. The new entity provides oversight to ensure operational efficiency and increased collaboration across our media units. Our global media networks, Initiative and Universal McCann, continue to operate as independent entities, each aligned where appropriate with its respective full-service marketing network partner. The previous existing entities that comprise Mediabrands remain in the IAN segment. The financial results for these units are analyzed together in MD&A for the three and nine months ended September 30, 2008 and 2007.

Although the U.S. Dollar is our reporting currency, a substantial portion of our revenues is generated in foreign currencies. Therefore, our reported results are affected by fluctuations in the currencies in which we conduct our international businesses. We do not use derivative financial instruments to manage this translation risk. As a result, both positive and negative currency fluctuations against the U.S. Dollar will continue to affect our results of operations. Foreign currency variations resulted in increases of approximately 2% and 3% in revenues, salaries and related expenses and office and general expenses for the three and nine months ended September 30, 2008, respectively, compared to the respective prior-year periods. In recent months the U.S. Dollar has started to strengthen against several foreign currencies, and if this trend continues, it will have a negative impact on our consolidated results of operations.

Third Quarter and First Nine Months of 2008 and 2007 Highlights



                                        Three months ended             Nine months ended
                                        September 30, 2008            September 30, 2008
 % increase/(decrease)               Reported         Organic      Reported         Organic
 Revenue                                  11.5 %           7.6 %        10.7 %           6.4 %
 Salaries and related expenses             5.7 %           1.7 %         7.5 %           3.1 %
 Office and general expenses              12.2 %           9.2 %         4.3 %           1.1 %

                                        Three months ended             Nine months ended
                                           September 30,                 September 30,
                                       2008            2007          2008            2007
 Operating margin                          6.7 %           3.3 %         5.1 %           1.6 %
 Expenses as % of revenue
 Salaries and related expenses            62.8 %          66.3 %        64.4 %          66.3 %
 Office and general expenses              30.2 %          30.1 %        30.2 %          32.1 %
 Diluted earnings (loss) per share   $    0.08       $   (0.06 )   $    0.12       $   (0.07 )

Management's Discussion and Analysis of Financial Condition and Results of Operations - (continued)

RESULTS OF OPERATIONS

Consolidated Results of Operations - Three and Nine Months Ended September 30, 2008 compared to Three and Nine Months Ended September 30, 2007