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‘We don’t get to dictate to the client and have to show flexibility’ – says CEO of IPG Michael Roth

Mumbrella Asia's Ravi Balakrishnan caught up with IPG chairman and CEO Michael Roth for a quick interview on managing client relationships, building strong agency brands and working on 'hidden accounts'

IPG recently promoted Philippe Krakowsky to chief operating officer. What factors do you consider when you have multiple candidates for such a role?

“From day one, when they asked me to step in and be CEO at IPG, I had started working on succession planning. Because public companies have a responsibility to their shareholders to make sure there’s an orderly transition on succession: not just for my position, but for all others at IPG.

“At the time we promoted Philippe, we also promoted Daryl Lee (as global CEO) and Guy Beach (as global chief commercial officer) at Mediabrands and Eileen Kiernan (to global CEO of UM). They were all internal promotions. The fact that we have that kind of capability and a succession in place is frankly unique in our industry. Other changes in the industry have been very transactional.

“But we have had these plans in place. Every year, I review talent with our board of directors for all of our agencies and CEOs including myself. We are fortunate to have someone like Philippe in terms of talent to take on additional responsibilities and yet still have a number of potential candidates for other roles within IPG. That’s how a well run company should operate.”

What about managing expectations? There would have obviously been a few other people who considered themselves COO material.

“We are fortunate to have a number of candidates for various roles within IPG. This promotion is a recognition of what Phillipe was doing all this time, a codification of the role he was playing. He has been with me since I came into the company and has had numerous roles within IPG. 

Philippe Krakowsky

“That was not by accident. It was intentional to give him operating responsibility. He was the CEO and chairman of IPG Mediabrands and that was to give him the experience necessary, so he could step into the role of COO of IPG. This is all part of a plan and that is what our shareholders demand that we have.” 

Moving from changes within IPG, to those outside – several global companies have done away with CMO positions. Why do you believe this is happening? And how does it affect the relationships you have with marketing teams?

“A lot of companies have put the responsibility of marketing communications back into the local businesses. For global companies, the presence of the CMO is important but the definition is different now from what it was years ago. Today, a CMO has to be capable of understanding and be well versed in data analytics, media, creativity and different go-to-market strategies. Such CMOs work very closely with the IT function within the company, because  data analytics are critical to success. 

“That said, even when you do away with CMOs and start dealing with local CEOs, we are well positioned to service the client. Clients are dictating how they want to work with us. We don’t get to dictate that and have to show flexibility.”

You have spoken in the past about the hidden accounts, the RFPs the agency universe does not get to see. How much of a headway have you made when it comes to cracking or being a part of these?

“We do a pretty good job. We had some headwinds getting into this year due to client losses. But now, we are well along the way to replacing those losses. And a number of wins are accounts where there are existing clients and we are adding projects. Or they are projects from previously non-clients. It is all in the value proposition that we bring to the table. It’s a strong sign of our capabilities and how we are viewed in the market.” 

Why do you believe the IPG method of open architecture works better than consolidated P&Ls or merged agency brands – which we saw a lot of last year?  

“First of all, our results are better and so it must be working better. Aside from that, the fact that we invest in our brands and that individuals within our company are identified with a very strong brand is important from a retention and recruitment perspective. 

“We do a talent review on all of our brands and opportunities. The ability to bring together different go-to-market strategies on a client centric basis is very powerful. The marketers know they are getting diversity of thought rather than a homogenised organisation where, if they have problems with a particular area, it is harder to respond.

“Now we just tap into one of our other resources under open architecture. The last three or four global meetings I have had were all open architecture clients. In the room, I have McCann, FCB, MullenLowe, Weber Shandwick, Octagon and Mediabrands all sitting together. And now Acxiom, siting at the table bringing resources to meet the needs of the client. It’s a competitive advantage for us.” 

Any plans to collapse any of your agencies into one another?

“We looked at the strategic positioning of our company 14 years ago and disposed of the businesses that we did not want to have. Every once in a while, we merge some agencies together. But overall, we are very well positioned strategically and whatever we do in terms of consolidating is for a particular market. If we do so, it is with a view towards effectively servicing a client base that those agencies have.”  

Are there any significant acquisitions like Acxiom on the anvil for IPG? 

“We don’t see any need from a strategic point of view to do any major transactions. Acxiom was on our wishlist for a number of years and we were very excited to have the opportunity to bring it within the IPG family. 

“Whatever transactions we do in the future will be smaller, strategic and dictated by geographic location or specific, unique capabilities. We do not have any big holes in our offering.” 

From your perspective, how likely is a global recession? Where have you seen the sharpest declines in growth and how are you planning to tide this through?

“There is a lot of uncertainty out there – of that, there’s no question. Having lived through 2008-2009, we are very focussed on making sure that our cost profiles are consistent with revenue. We learnt our lessons and so, at the same time, we are always investing.

“Even a downturn is an opportunity to invest in talent and make sure we have the right people. When the economy turns around, we will be well positioned to capitalise, which is exactly what happened in 2009 when we were very strong in terms of capabilities and able to outgrow the sector.”

Finally, what did you make of Greta Thunberg and her speech at the UN? 

“I loved it, actually. My view is that the responsibilities of public companies are greater than just their responsibilities to shareholders. They extend to employees, suppliers, clients and are very broad.

“In the area of responsibility to society, we have to ensure we are cognisant of climate change. We have taken positions on background checks with respect to guns. We have taken positions with respect to diversity and a recognition of various issues that are surrounding society in terms of equal opportunity and treating people properly. As a company, I am proud that our board supports us taking those positions.”

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