Interpublic's New Republic: Collaboration, Supreme Client Focus

Plagued by accounting probes and client losses, Chairman-CEO Michael Roth Monday addressed the Interpublic Group of Co.'s continuing turnaround. He said it will be propelled by the Draft/FCB merger, a new culture of collaboration, expansion into emerging markets--and, maybe, Wal-Mart.

The core of Roth's vision is for IPG's 43,000 employees to embrace "a totally client-centric focus." Traditionally, he noted, the sprawling holding company--the world's third-largest in marketing services--has been burdened by "silos," a reference to the smaller self-contained companies under one parent company, and a culture in which agencies were loath to cooperate with one another.

But the merger of direct-marketing shop Draft and traditional ad agency FCB, Roth said, is a trendsetting example of how entities with different expertise can pool resources to build clients' brands. The move has paid off--with new business from Citi.

Another silo-cracking move is creative-focused Lowe's newfound willingness to collaborate with the rest of IPG, Roth said. IPG executives have previously indicated that interaction with digital shop R/GA is a mandate for Lowe.

"Clients realize we're willing to put the silos behind us and meet their needs," Roth said at an investors' conference in California.

IPG could receive a shot in the arm if one of its agencies snags the prized Wal-Mart account in the next several weeks. By one measure, it has a 50 percent chance with two of its shops--Draft/FCB and The Martin Agency are two of the final four contenders.

Going forward, Roth also cited international expansion into growth markets--such as India, Brazil, China, and Russia--as new revenue opportunities.

Roth walked into a firestorm last year when he took over IPG. The company was tainted by a federal investigation into financial irregularities, and trying to dig itself out of the burdensome 425 acquisitions made in the late 1990s. Its tough times continued with the loss of $160 million in revenues in 2005 due to client defections.

Yesterday, Roth expressed muted optimism, with revenue up slightly for the first half of 2006 and a stock price trickling upward.

"We've made progress," he said, but "there's work to be done."

"While the company still has a ways to go to fill the gap from the $600 million Bank of America business [last year], we think it is making good progress," wrote Credit Suisse analyst Debra Schwartz.

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