In today's fourth-quarter earnings call, IPG CEO Michael Roth offered a cautiously optimistic outlook for 2016 after a 2015 in which the holding company beat its own expectations for organic growth across its agency network.
After the meeting, Roth talked to Adweek about his takeways from Q4, his company's newly refurbished heaquarters and its plans to stand out in a market that continues to present new challenges to holding companies and their partners. (He also talked about his firing of Campbell Ewald CEO Jim Palmer and his confidence in that agency's new leadership.)
He even threw in a bit of nostalgia for his childhood in Brooklyn and some thoughts on how the newly opened nation of Cuba reminds him of his childhood home. Check out the conversation:
Adweek: What are the key takeaways from the last quarter of 2015, which will probably be remembered as the year of "Mediapalooza?"
Interpublic Group CEO Michael Roth: All of our offerings were up [in Q4]. It's not just media, though that got the most press. Obviously media has the most dollars at stake, but it takes creative, digital and PR all working together to provide our integrated offering.
I'm most excited about the diversity [of our success] geographically as well as across our different disciplines. Over the last two years, we outperformed our peer set in terms of organic growth at 12 percent, which is really what's relevant.
In 2015, there's no question media was the most important offering because that's where all the reviews were. But the rest of our business goes on.
Maurice Levy recently predicted another round of media reviews in 2016. Do you agree?
I think there are plenty of clients out there who have yet to look at this, but I have no inside knowledge; maybe he does. I don't think we're done with the media reviews, though I doubt they will be as large as in 2015. Still, for us that would be an opportunity.
On the call you emphasized the role played by project-based digital work within the IPG network. What's your take on various narratives predicting the end of the traditional AOR model?
I think it's a strategic benefit because digital is in everything we do. Some of the work is project-based and some of it is AOR, but there's no question that, on a macro basis, digital will overtake TV in 2016. Therefore, we have to be well-versed in it. Our agencies have to have the capabilities or partner with standalone digital shops. McCann has its own digital capabilities, Mullen Lowe has Propero as well as its own—and the whole point of our open architecture is allowing them to reach out to R/GA, Huge, and other digital units.
There's been widespread talk of Publicis acquiring Cheil Worldwide. Do you see mergers and acquisitions in the near future for IPG?
We target $150-200 million per year for acquisitions. There aren't any big holes in our offering, so we think of them as additives to what we already have: For example, in 2015 we bought an analytics company in Israel, a PR agency in China and a digital agency based in Germany. We don't need any big transactions like Cheil.
Have reports regarding Unilever's "zero base marketing" approach and other major clients' new cost-cutting initiatives affected your operations?
Every client every year looks at budgets and we have negotiations in terms of cost and what we can deliver. Call it what you want, but this has been around for years; clients just changed the way they refer to negotiating fees for services.
IPG consolidated into a new headquarters in December 2015. How has that move affected operations?
It was opportunistic. We have moved our headquarters three times in the last 55 years. … Our landlord came to us with an opportunity involving a tenant that had recently refurbished the space we were looking for and they got acquired, so there were 100,000 square feet available in the same building where we already had a significant presence.
The move puts us closer to the most important parts of our business and it's consistent with our "open architecture" approach. To be candid, it provided an economic advantage: the rent is cheaper—and by the way, we got some very nice space in the process. Let's not lose sight of the fact that we saved money.
How does your Brooklyn upbringing affect your leadership style?
It's my roots. When you grow up in a diverse environment, one that is what I call gritty in terms of having to deal with more dynamic surroundings both competitively and culturally, I think it frankly makes for a great background. It brings a certain perspective in which you know how to deal with adversity and move effectively through it, and I do credit being brought up in Brooklyn as an important tool.
I just came back from Cuba … it actually reminds me of growing up in Brooklyn in the '50s. Depending on what happens with the embargo, expect to see IPG having a presence there.