The Interpublic Group is so enthused about the prospects for client fallout from the pending Publicis-Omnicom merger that it has set up a “war room” dedicated to analyzing conflicts that could trigger agency reviews.
That’s according to IPG CEO Michael Roth, who disclosed the effort at a Goldman Sachs conference in New York earlier this week.
Asked about the impact of the proposed merger, Roth said that there will clearly be some clients that are “uncomfortable” with the fact that one or more competitors are served by agencies under the same ownership. IPG hopes to exploit that discomfort. “There will be some fallout,” said Roth, “and we’ll be hanging under the net waiting for the opportunities.” He noted one oft-mentioned conflict that would emerge from the combination of the two holding companies—Coca-Cola and Pepsi. “We happen to be a Coke shop,” he added.
While scale is critical in today’s environment, “we have it,” said Roth. “When clients need scale all over the world in various disciplines we get the call. And I don’t think this transaction is going to change that.”
Roth also said that Publicom’s suggestion that it needed to merge in part to fend off would-be disintermediators like IBM or Accenture was specious. Such companies may compete on some levels with the big ad-marketing firms but they don’t present the whole suite of services offered by Adland giants including “big ideas or integrated offerings. I don’t think they’re in a position to deliver that.”
Roth also told conference attendees that IPG is on track to achieve between 2% to 3% organic revenue growth for full year 2013. Roth said that the company’s revenue growth prospects roughly mirror what in-house researchers are projecting for global ad spend growth over the next couple of years. “It’s not robust,” said Roth. That said the company believes it can expand profit margins with low single digital revenue growth.
And to some degree, emerging market growth is off-setting the stagnant state of some mature markets, particularly Europe, Roth noted. The Asia-Pacific region, he said, is now the company’s second-largest region by revenue, behind North America, which accounts for 60% of the company’s business.
Roth also said that programmatic buying is a key industry trend. “Eventually that’s where it’s heading,” he said. “You want to buy audiences efficiently, not just buy them cheaply. That’s where the added value will come from us.”