IPG's New Media Model: Autonomous Interdependence Vs. Unbridled Independence

From the outside, Wednesday's reorganization of Interpublic's media operations may look like a new form of disorganization within the beleaguered ad agency holding company, but it may actually be the new model for integrating media and advertising services with flexibility and on a large scale. It's a hybrid model, for sure--and one whose advantages may not be easily understood at first glance. But insiders say it offers the best of all worlds, preserving the autonomy of big media shops like Initiative and Universal McCann, while aligning them strategically under the umbrella of strong branding and marketing services groups Draft FCB and McCann Worldgroup, respectively.

This approach has many advantages, they say. The media shops will continue to operate financially independently, managing their own "P&L" (profit and losses), but they will be fused strategically into the front-end of the brand and communications planning process at the big brand shops.

The change initially is a bigger one for Initiative and Draft FCB than for Universal McCann and McCann Worldgroup, which have always maintained a strong dotted line relationship. While Universal will reap the benefits of autonomy and financial independence under the new structure, its numbers will be "rolled up" under the Worldgroup.



The change is much bigger for Initiative and Draft FCB--agencies which have been formed over time through the bundling and amalgamation of disparate Interpublic units and acquisitions, but which are now being fused together in an experiment that insiders believe is a model of the agency of the future.

The special sauce for Draft FCB is its integration of superior branding capabilities of FCB with the super efficiency and accountability of Draft's direct marketing expertise, especially its leadership in online and interactive media, and that newly formed marriage promises to deliver exactly what many big marketers have been pleading for: long-term brand building capabilities, coupled with immediate ROI measures. Now Initiative and its communications planning tools and consumer media insights will be layered onto that.

This is, in Madison Avenue parlance, a "win-win" for Interpublic clients--many of whom already share Initiative and Draft FCB as agencies, and who will now benefit from greater integration and front-end alignment.

In other words, the new Interpublic media structure offers all the benefits of advertising and media integration coupled with the operational fluidity of decentralization. Ultimately, the proof will be in the results the new organization structure yields in coming months and years--but there's already a good vibe circulating around Draft FCB, and while the McCann assets are still in rebuild mode, they've got an exceptional base, and great managers in place.

As for integration at the corporate level, the new Interpublic structure addresses that, while ridding the company of the fat overhead of the Interpublic Media group. CEO Mark Rosenthal, who has been on a medical leave, will go off Interpublic's books as soon as he completes the transition and officially shuts down Interpublic Media. The unit's CFO Terri Santisi has already left to take a job at sports marketing firm IMG.

As for Interpublic Media's other assets, they are the real promise of Interpublic's media future and will be centralized under a new "Futures Marketing Group." Smartly, the unit has substituted the word marketing for media, which ultimately is what the whole organization is supposed to be doing.

The word "futures" is often seen in a condescending way on Madison Avenue, and reads to some as a lot of wheel-spinning, but the components of this new futures group are all about action and accountability. The include IPG's vaunted Emerging Media Lab, the new Consumer Experience Practice headed by long-time research diva Stacey Lynn Koerner, Yellow Pages giant Wahlstrom, NSA and operations IPG dubs as "hyper-local media offerings." The unit doesn't simply have an R&D focus, but is also responsible for deploying and even investing in new media options, such as Interpublic's recent stake in Facebook.com. In only thing close to it, is Publicis' Denuo unit.

The futures unit will itself report to Interpublic's new Media Council, which will oversee the management of all its disparate media operations, and will coordinate corporate-level policies, resources and negotiations. All of the operations will continue to benefit from IPG's centralized media negotiations unit, Magna Global, though Magna Chairman-CEO Bill Cella is moving into Draft FCB, where he will become a vice chairman.

On the surface, some will continue to see the early abort of 17-month-old Interpublic Media as a failed experiment, but insiders look at it as a natural progression, and part of an evolution into a new, more potent organizational structure that makes media and marketing services interdependent and integrated. The way many people think they should be.

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