UPDATE 2-Interpublic beats estimates amid slump

* Q1 loss 16 cents/shr vs Wall St view loss 20 cents/shr

* Q1 rev $1.33 bln vs Wall Street view $1.30 bln (Recasts, adds analyst estimates, byline)

NEW YORK, April 28 (Reuters) - U.S. advertising company Interpublic IPG.N posted a smaller-than-expected quarterly loss as staff reductions and other cost-cutting measures helped mitigate the severe downturn in advertising spending.

Interpublic Group of Cos Inc on Tuesday reported a first-quarter loss applicable to common shareholders of $73.9 million, or 16 cents a share, compared with a loss of $69.7 million, or 15 cents a share, a year earlier.

Interpublic, which counts General Motors GM.N as one of its single largest clients, is struggling in the face of the worst advertising downturn in more than two decades. Across the industry, marketers are cutting budgets and demanding lower fees from their advertising, communications and media agencies.

The advertising giant, and parent of well-known agencies like DraftFCB and McCann-Erickson, reported that first-quarter revenue fell 10.8 percent to $1.33 billion.

While down from a year ago, before the worst of the advertising industry downturn, the results nonetheless surpassed analyst expectations. Analysts polled by Reuters Estimates had forecast a loss of 20 cents a share with revenue of $1.30 billion.

Interpublic reported a 5.6 percent drop in organic revenue, a closely watched industry benchmark that excludes foreign currency impact and recent acquisitions.

“To date this year, we’ve continued to see the significant effect that the global recession is having on demand for marketing services,” Chief Executive Michael Roth said in a statement. “As was the case in the fourth quarter, we demonstrated the appropriate cost discipline and successfully managed margins.”

Interpublic said that over the past two quarters it had cut about 2,800 jobs, or 6 percent of its workforce. In the first quarter, total operating expenses fell 8.8 percent to $1.4 billion.

Shares of Interpublic closed Monday at $5.54, but have climbed nearly 40 percent so far this year. (Reporting by Paul Thomasch; Editing by Derek Caney, Dave Zimmerman)