“It’s Back to the Future for IPG’s Media Shops” by Steve McClellan, Adweek

Debate gains newfound urgency as creative agencies resume control

Published Oct 23, 2006

New York Back in March, Mark Rosenthal, then CEO of Interpublic Media, wondered publicly if the trend toward unbundling media from ad agencies had gone too far. Interesting question from a guy who had spent the previous six months waging a tense corporate battle to wrest media agency Universal McCann away from McCann Worldgroup.

Rosenthal won that battle but ultimately lost the war. A year and a half after he joined IPG, the holding company last week scrapped the unit that the former MTV exec created to house UM and Initiative—Interpublic Media—and realigned the two agencies with separate IPG ad shops. UM is reunited with McCann, led by John Dooner, and Initiative now reports into the newly merged DraftFCB Group, run by Howard Draft. It’s a move three months in the making, dating back to when Rosenthal took a medical leave this summer. (He is back now and helping with the transition before leaving IPG at year’s end.)

The announcement no doubt pleased the heads of countless creative agencies that had lost their media departments to the decade-old unbundling trend. And the move rekindled the debate that has raged since then: Are ad and media strategies executed more effectively by creative and media shops working as a single entity?

The answer, for many, isn’t a simple one. “If it serves to bring media and creative on an account closer together and be more collaborative, it is a very good idea,” said Arthur Anderson, partner in consulting firm Morgan Anderson, of IPG’s move last week. “This is needed, particularly in the new age of integrated marketing and proliferating communications channels.”

That’s part of what IPG is trying to accomplish, said Phillippe Krakowski, an IPG evp and chairman of the new Interpublic Media Council, a group established to set companywide media policies, and oversee new media initiatives and investments. “It’s an acknowledgement that media is important and strategic and that we’re moving [media and creative] closer together,” he said. “We’re not just repartriating the media agencies.”

But competitors weren’t buying the IPG line. “They threw in the towel,” said one competitor. “I don’t know what the benefit is to stand-alone media clients. They didn’t sign up for an integrated offering.”

For the most part holding companies have indicated they have no plans to follow IPG’s lead, although they couldn’t be reached to confirm that on the record. But one holding company head has privatately indicated that if clients demand it, they’ll have to comply.

Asked last week if the realignment wasn’t anathema to media shops, which were thrilled to win independence after years of feeling like second-class citizens at creative shops, Alec Gerster, worldwide CEO at Initiative, replied, “We’ve got to protect ourselves from the sins of the past—under-resourcing for media and under-appreciation of its role in the process. If we do that, and I think we have in this case, then we can do intriguing things together.”

But is it really a better structure going forward? “It’s not about structure, it’s about leadership and ideas,” said Gerster.

The unbundling debate was in full swing at this year’s 4A’s Media Conference, when several top media agency executives argued during a panel discussion that rebundling simply didn’t make sense. “The notion that the answer to stronger connectivity between message and the medium is a return to the model of the 1980s is nonsense,” said Jack Klues, chairman, Publicis Groupe Media.

Nonetheless, agencies at other holding companies are grappling with the same issues and have recently taken smaller steps to bring planning at creative and media shops closer together.

Some, like Young & Rubicam and Euro RSCG, have hired media planning chiefs to work closely with their creative departments. Others have either built new communications planning departments (JWT) or have melded account planners with media planners (Goodby, Silverstein & Partners). The approaches are different, but they’re all pursuing different paths toward the same goal of re-incorporating media planning into the creative development process.

All that said, Anderson stressed that “only time will tell” if IPG’s realignment strategy is the right move. A key question, he said, has to do with conflicts: “Will a client of DraftFCB accept a competitor being serviced at its new affiliate Initiative?”

The IPG realignment has certain safeguards that the company said would prevent, for example, McCann from stripping UM of the resources it needs to service clients.

That wasn’t always the case. “Five years ago UM was a very good agency. Then McCann hit a rough patch and started keeping their profits and left UM underinvested in tools and people, and they started being crappy,” said one high-level executive in the IPG family. “We will not let that happen again.” To help prevent a recurrence, UM will retain the separate P&L that Rosenthal fought for, and which came into effect in January 2006. So will Inittiative. And the chief financial officers at both shops will have dotted-line reporting structures into their creative parents and IPG.

Under the new plan, Nick Brien, worldwide CEO at Universal McCann, will now report to Dooner. And Initiative worldwide CEO Alec Gerster will now report to DraftFCB president Laurence Boschetto.

Meanwhile, Magna Global, a negotiating arm created six years ago, remains in place, but its chairman, Bill Cella, has been promoted to vice chairman at DraftFCB, where he will report to Boschetto in New York. There is no plan to replace Cella per se, as his No. 2, Larry Blasius, will continue to oversee day-to-day negotiations with vendors.


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