• by Joe Mandese , December 10, 2008

Michael Roth, the Chairman-CEO, of one of America's two remaining agency holding companies, Tuesday said the Interpublic Group of Companies as well positioned as any agency group, financially and structurally, to deal with a protracted economic recession, but said the biggest factor is the "strength of our clients." He said Interpublic has a healthy, recession-resistant mix of clients, including a heavy dose of consumer goods marketers, and bellwether technology firms such as Intel, Microsoft and Verizon, and that its biggest financial services brand, MasterCard, is outperforming that beleaguered sector. He also said that the economic downturn has put pressure on agency margins and that clients are demanding even more efficient costs and better results from their marketing services that might further commoditize media.

"I think that's what you are seeing right now is clients are demanding to see where their dollars are being spent," Roth said during a presentation at Tuesday's session of UBS' "Media Week" conference in New York. He indicated that economic concerns are fueling even more placing even more acute pressure on the efficiency of media buying results, and that clients have stepped up audits of agency media services.

"Media buying is basically efficiencies and costs," Roth said, painting an extremely commoditized view of the future of media services. "If you can prove that you can buy more efficiently than somebody else, that's how you're going to win the business.

"The buying business has become much more commoditized," he emphasized, "and when you're dealing with any commodity, the key component of that is are you getting the better price. If there's a competitor out there that can provide a better price, then quite frankly, we don't get the business."

Roth grouped Interpublic's recently minted MediaBrands division - the new corporate-level unit overseeing Interpublic's Initiative and Universal McCann media networks - as one of the "underperforming" divisions that are "back on track," and singled out the unit's leadership team -Media Brand's Nick Brien, Initiative's Richard Beaven and Tim Spengler and Universal McCann's Matt Seiler - as key factors in that turnaround, emphasizing their "go-to-market" strategies.

Asked if he feared that advertising agencies might become disintermediated by big digital media players such as Google, Microsoft and Yahoo that are accruing powerful consumer data streams and efficient systems for serving and measuring advertising results, Roth indicated that Madison Avenue's strength was not media per se, but the kind of "big idea" normally associated by creative departments. In fact, Donny Deutsch, chairman of Interpublic's Deutsch shop, and one of the industry's best known creatives, has had a show on CBNC entitled, "The Big Idea." Ironically, it was canceled last week.

"Yahoo, Microsoft, Google are vast resources with respect to data, and it's basically what you do with the data that is critical to the marketers that are out there. Our job is to use that data and to help our clients spend their dollars in the most efficient way," Roth explained. Ultimately, he said Madison Avenue's key differentiator was creative concepts, noting, "I don't see Microsoft, Yahoo or Google offering the big idea with respect to our clients."