Interpublic Group of Cos.' (IPG) third-quarter profit fell 47% as the advertising giant continued to cut costs with its revenue tumbling further, although results were above analysts' expectations.

The ad industry has been hit hard by the global recession. Improved sentiment in the world economy hasn't translated to rising orders, and clients are getting used to paying lower fees as ad firms look to retain their business. Interpublic and its rivals have responded by cutting jobs, as salaries typically represent a bulk of an agency's expenses.

On Tuesday, French ad giant Publicis Groupe SA (PUBGY, PUB.FR) posted a 7.4% drop in third-quarter organic revenue, but noted gradual improvement in the quarter, while Omnicom Group Inc. (OMC) last week posted a 23% profit decline.

Interpublic Chairman and Chief Executive Michael I. Roth said client sentiment has stabilized, but noted the company remains cautious, making it difficult to predict what growth will look like next year.

Interpublic, the parent company of DraftFCB and McCann-Erickson, posted earnings of $24.1 million, or 3 cents a share, down from $45.7 million, or 8 cents, a year earlier.

Revenue dropped 18% to $1.43 billion. It was down 14% domestically and 24% abroad. Organic revenue, which excludes currency changes and acquisitions, decreased 14%.

Analysts surveyed by Thomson Reuters expected earnings of a penny on revenue of $1.42 billion.

Total operating costs were down 16%. Over the past year, the company has reported about $143.3 million in severance costs related to cutting about 5,100 employees, or 11% of its work force.

Operating margins fell to 4.1% from 6.7%.

Shares closed Tuesday at $6.11, and were inactive premarket. The stock is up 54% this year.

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com