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A New Agency Holding Co. Is Born

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Interpublic Group of Cos. will soon embark on a sweeping reorganization that consolidates the marketing-communications resources of more than a dozen IPG agencies under a new global network called The Partnership, sources said.

The effort is no small undertaking, given that it will affect 70,000 employees and a slew of blue-chip global clients that spend an estimated $40 billion a year on advertising in the U.S. alone.

Nearly every IPG shop that is not aligned with McCann-Erickson is affected by the realignment. They include, among others, Lowe Lintas & Partners, Deutsch, Dailey & Associates, Mullen/LHC, The Martin Agency, Suissa Miller, Initiative Media, DraftWorldwide and Golin/ Harris.

Even those that have yet to enter the IPG fold, namely True North's Bozell and Avrett Free Ginsberg, are accounted for in the new model. (TN's pending sale to IPG would have to be completed before its properties could be included. That deal is expected to close in late June.)

The Partnership would become the third pillar in IPG's organization, alongside McCann and FCB, which will remain separate global networks.

The proposed plan, engineered by CEO John Dooner, involves pairing IPG's various public relations, media, advertising and marketing-services agencies into groups in an effort to streamline numerous freestanding, or non-network, agencies.

Dooner, the architect of the WorldGroup holding company that houses McCann's resources, would not comment on the plan. But sources said the idea was presented to the board last week and is expected to become official in July.

Each group will be overseen by one of the member agency's CEOs who will function as a "group leader" with the title of director or managing partner of The Partnership, sources said.

In turn, those groups will operate under the authority of a newly installed management team to be led by Frank Lowe as chairman, TN's David Bell as chief executive and Michael Sennott, who will move from Lowe Lintas in a supporting role, according to sources.

While participants appear to be on board with the concept of building a new global communications company, more than a few key elements need to be ironed out.

For example, the number of groups, as well as the thornier issue of which agencies are grouped together, are in flux.

In fact, there have been several revisions to a companywide organizational chart that "seems to change from day to day," joked one source. "One day Bozell and Mullen are in the group with Deutsch and Avrett; on another, they're somewhere else," the source added. Said another: "It's a moving target. One guy will balk at being lumped in with whoever, and it's got to be re-examined."

Last week, agency CEOs were wondering, "What's in it for me?" and debating the overall merits of the massive reorganization.

Said one CEO, "On paper, it's a smart move. To the Street, it looks like a tighter organization. You have future management clearly being designated (by naming leaders of the groups). But then, you've got to put blood and guts against it. See if it works in real life."

Still, most executives seemed more preoccupied with figuring out the myriad scenarios regarding reporting lines and whether they inherit new bosses as a result of the restructuring. Case in point: the ad group that will likely consist of Deutsch, Bozell, Tierney Communications and Avrett Free Ginsberg. Some believe that The Martin Agency and Mullen—which currently report through Lowe—also will land in this group.

However it is structured, at the top sits Donny Deutsch, a newcomer to the IPG family following the sale of his agency in November. One agency executive believed to be in the ad group wondered, "Does that mean we report to Donny now? Or to Bell or what?"

It's unclear what happens to several agencies, including Campbell-Mithun and Carmichael Lynch, as well as Hill, Holliday, Connors, Cosmopulos.

Reacting to the overall plan, one IPG agency CEO said, "There are a lot of issues here. One is ego. Two is what makes business sense. And three is, How will John Dooner remake Interpublic?"