Incoming CEO Mulls New Size And Shape For Lowe

When Tony Wright arrives at Lowe today as the new worldwide CEO, one of his first assignments will be to help determine the size, shape, scope and focus of the $5 billon Interpublic Group network.

Wright, who replaces Jerry Judge, inherits a shop whose key offices—such as New York and London—have been defined in recent years largely by mergers, account losses and management turnover.

The challenges for Wright and worldwide COO Ed Powers, another outsider starting today, are daunting by any measure. Like any CEO, Wright will be trying to ingratiate himself to clients, grow revenue, control costs and win over staffers. At the same time, he will be called on to finalize and execute a plan to restructure a 23-year-old agency that has been distracted by two mergers in five years.

Wright last week acknowledged talk of a restructuring and said the end result will be driven by client needs and modern marketing approaches, not just cost cutting. “The big, exciting opportunity for Lowe is to craft an agency structure that is fundamentally new,” he said. “It’s about being able to put marketing ideas on the table and doing it globally.”

One popular idea, according to sources, is to recast Lowe as a leaner, creatively driven agency with global reach.

IPG CEO David Bell and board chairman Michael Roth are leading the internal talks regarding the new Lowe, which sources said will have a fraction of the current 84 offices (perhaps as few as 20-25), a renewed focus on creative and possibly a headquarters relocation.

Bell and Roth declined to discuss in detail their vision for Lowe. They suggested, in separate statements responding to questions from Adweek, that the shop still has a leading role to play in the turnaround of IPG, which has been plagued by problems of its own in the past three years, including a declining share price, an accounting imbalance still under investigation and revenue growth that lags rivals such as WPP Group and Omnicom Group (see sidebar).

“We are very pleased with the new team and confident in their abilities. We’re prepared to support the plan they will bring forward to ensure an important future role for Lowe within the group,” Bell said. Added Roth: “The board has charged Tony and Ed with taking the thinking and alternatives already developed at Lowe and Interpublic and creating their own strategic plan.”

Wright, 43, joins from WPP’s Ogilvy & Mather, where in nine years he rose to worldwide chief strategy officer, working with clients such as American Express, BP and Motorola. Powers, 46, spent the past year as COO of IPG’s Constituency Management Group, after two years executing the merger of three PR firms: Weber, Shandwick and BSMG. Wright’s arrival coincides with IPG’s unraveling of The Partnership, a multidisciplinary division that included Lowe and marketing-services units such as Draft. The division is expected to dissolve by year’s end, further illustrating IPG’s desire to focus on the core issues at Lowe, said sources.

Talk of recasting Lowe dates back as far as 2002, even before sister shop Bozell was folded in, said sources. In January, however, the issue came to the fore after McKinsey & Co., hired by IPG to assess its agencies, pointed out the merits of streamlining Lowe, shifting its base to London and possibly even merging it with Foote Cone & Belding, sources said. An FCB merger was quickly dismissed, however, owing to client and culture conflicts.

Decisions about which offices to keep, close or sell back to their principals will be based not only on performance but also the needs of clients, said sources. Offices with predominantly local business will naturally be more vulnerable, while those servicing global clients such as Unilever, Nestlé, Johnson & Johnson and General Motors will remain essential.

With the agency abandoning a traditional global network, a case could be made for making London the HQ, given Lowe’s roots there and that Unilever and Nestlé are based in Europe. IPG would not comment on the potential relocation.