IPG Creates Media Giant

The Interpublic Group of Cos. is planning the Big Bang of media mergers.
IPG plans to combine its Western International Media, based in Los Angeles and Initiative Media in Paris. It will rank–for now–as the world’s largest media management firm with an estimated $10 billion in billings, eclipsing Young & Rubicam’s The Media Edge, which claims $9 billion in billings.
An announcement detailing the creation of the new entity, tentatively named Western: Initiative Media, could come as early as this week, sources said.
IPG chairman and chief executive Phil Geier could not be reached on Friday. Executives at the IPG shops believed to be involved also could not be reached or declined comment.
The holding company’s grand plan, according to sources, is to eventually consolidate media buying for two of its three global agency networks, Ammirati Puris Lintas Worldwide and Lowe Group, as well as other IPG-owned shops. Media planning will be evaluated on a case-by-case basis.
The exception will be IPG’s biggest network, McCann-Erickson WorldGroup, with an estimated $14 billion in global billings via McCann-Erickson Worldwide Advertising and other units. Agencies that report through McCann, such as Angotti, Thomas, Hedge and Gotham, will continue to use McCann’s media resources.
“[McCann president] John Dooner doesn’t want his money playing with the other kids’ money,” said a source.
IPG shops likely to participate, said sources, include: Campbell-Ewald Advertising, Warren, Mich.; Carmichael Lynch, Minneapolis; DraftWorldwide, Chicago; Hill, Holliday, Connors, Cosmopulos, Boston; Goldberg Moser O’Neill, San Francisco; Dailey & Associates, Los Angeles, and other properties.
“It will be up to them if they participate or not,” said a source. “But there will be a strong suggestion they do.”
Agencies that shift their media billings into the new IPG company will shrink their media departments.
The new entity will include U.S. and international components, likely based in New York, and feature a board of directors drawn from various IPG agencies. Michael Kassan, president and chief operating officer of Western, and Initiative chief executive Marie-Josƒ Forissier will likely serve as vice chairmen, said sources. The company will report to Larry Lamantina, an IPG executive expected to become chairman of Western: Initiative Media. Kassan, who has previously talked of applying a holding company model to media buying and planning, has been the driving force behind the initiative, said sources.
In the U.S., Western: Initiative Media will operate separate divisions under the Western, Media Inc. and Media Direct Partners banners to avoid conflicts. It could not be determined at press time what, if any, conflicts would arise as a result of the overall consolidation. Only a handful of major clients have been briefed so far, sources said.
The move is the latest example of the race among the largest advertising companies to build global media giants to gain efficiencies, cut costs and better serve clients worldwide.
It also seems to be a self-fulfilling prophecy for those media executives who have predicted that within the next few years, only four or five conglomerates will handle most of the world’s media billings.
WPP, for instance, has already begun combining the media department of sister agencies J. Walter Thompson and Ogilvy & Mather. Called MindShare, the operation is up and running in Europe and in Asia but has yet to debut in the U.S.
Young & Rubicam recently said it was launching Media Edge abroad. Grey’s MediaCom unit is also ready to expand globally.
Omnicom could follow. Daryl Simm, the executive recently hired from Procter & Gamble to head up a global media group, is slowly figuring out media synergies–with the intention of possibly combining all media units under one roof, said sources. –with Cristina Merrill