• by Steve McClellan  @mp_mcclellan, December 8, 2015

Interpublic Group confirmed today that it has acquired a majority stake in the Russian affiliates of the company's three global creative networks, McCann, Mullen Lowe and FCB, from ADV, its long-time partner in the country. Terms weren’t disclosed. 

Those agency affiliates have operated in Russia for twenty years. The acquisitions are the first for IPG in the country. Russia had been the only top-ten GDP country where IPG did not have an ownership position in its global creative agencies. 

"Russia remains a significant market for many of our largest global clients as well as home to a growing number of local and regional clients,” said IPG Chairman and CEO Michael Roth. The move, he added, “strengthens our foundation for future growth in this market and positions our global integrated agency brands to better recruit, retain and develop top talent.”

Roth also said the company would further invest in the newly acquired shops to expand their capabilities to better support clients in the region.”

While Russia is considered an important market for global clients with long-term growth potential, its economy has been battered in the last two years and the ad market has dropped sharply as a result. According to IPG’s Magna Global, Russia’s gross domestic product sank 3.8% this year while advertising expenditures fell 12%. Goldman Sachs estimates that the Russian ad market this year to be about $4.1 billion.

But Magna said that the market should stabilize next year although it will take until 2018 for Russia’s ad economy to recover to 2014 levels. That’s when the country’s financial crisis began due to a combination of oil price declines and international economic sanctions that were imposed in response to Russia’s actions in the Crimea and Ukraine.  

Based in Moscow, a team of existing senior leaders including Elena Modina, CEO of IPG Russia, Eugene Radewych, Chief Creative Officer of IPG Russia, and Elena Krasnova, COO of IPG Russia, will oversee the newly-owned operations. McCann, Mullen Lowe and FCB networks will provide global oversight of their respective agencies in Russia.

Within Russia ADV shareholders remain a minority owner in the creative networks and ADV will continue as IPG's affiliate partner for the company's other local operations, including IPG's media and marketing services units in Russia.