Skeptical Executives See Loss of Control, Strategic Errors Ahead
NEW YORK-The Interpublic Group of Cos. is evaluating a plan to consolidate its interactive functions into a central, publicly traded unit. But the plan has met with internal resistance.
“That is the will of [IPG Chairman Phil Geier], so that is the way it is going to go,” one source said, adding, that talks were ongoing and “delicate.”
Certain IPG agency executives have resisted the plan, fearful of losing control and the option of offering integrated services. “Some agencies just don’t want to give it up,” the source said.
Such a consolidation would include the New York-based interactive units of Ammirati Puris Lintas (APL Digital) and McCann-Erickson WorldGroup (Thunder House); Nicholson NY; and Boston-based Hill, Holliday Interactive. Also under discussion: what role Icon MediaLab International AB would play in the proposed scenario. Icon shareholders last month approved a plan granting IPG an initial equity position of just under 20 percent, making it Icon’s largest shareholder.
While no timeline has been set, the goal is to “get it done quickly,” one source said. Geier could not be reached for comment.
Of concern to some is whether the delivery of integrated services would be compromised if the interactive units are shifted away from their affiliated agencies. “There will always be a need to keep the interactive group close to individual agencies because otherwise, interactive won’t be an effective service for clients,” one source said. One IPG advisor is said to have told the holding company that the plan would create a “competitive disadvantage” both operationally and strategically.
Furthermore, amid signs that Net agency valuations and stock premiums are losing steam, skeptics believe that the time to realize significant financial rewards may have passed.
IPG’s rationale would be to give its online units more scope and greater presence. The holding company would gain a fresh source of revenue for itself and existing shareholders.
The idea is hardly new. True North Communications spun off Modem Media.Poppe Tyson last year and most recently, Bethesda, Md.-based Snyder Communications said it would issue a new class of stock to “track” the performance of its interactive units now operated under the Circle.com name.
Omnicom Group’s Communicade unit has bought mostly minority stakes in a number of interactive agencies, many of which are publicly traded. Each of Communicade’s units is allowed to pursue their own growth strategies [see related story, IQ News]. -with Noreen O’Leary and Adrienne Mand
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