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Growing a digital practice organically is much better than paying a huge price in acquiring one: Michael Roth

Michael Roth, IPG

The Chief Executive of IPG has had one key agenda on his radar for a while – how to shed a silo mindset, that can come easily when one owns established individual agency brands, and go to market with an integrated offer that makes the most out of IPG’s diversified offering. And if the 2013 wins of Cadillac, Zurich Insurance Group and SABIC are anything to go by, IPG is finally cracking that code. Unlike its competitors such as WPP, Aegis and Publicis, IPG is not announcing big digital acquisitions. But Michael Roth has a simple approach the holding company’s digital strategy and he tells DMA all about it in a conversation at Cannes, at the Villa Brands on the sidelines of Cannes Lions International Festival of Creativity. Excerpts:

It is almost five years now that companies have been speaking on the boost that digital advertising revenues can bring to overall revenues but for some companies, the numbers are not there yet. How do you look to address this at IPG?
Digital is yet a new environment for some and many clients are still getting used to it and learning how to work with it for their marketing objectives. We are experiencing how to be efficient at it. The profitability of that business, at present, varies depending on engagement and such factors but it is such an important part of everything we do that we have to build it in every service we provide. Whether it is the PR business, the advertising business or anything else that we offer, we don’t silo digital. We do have specialist offerings such as RGA, MRM and so on but we don’t look at it as a pure digital play. We look at the combined presence as an integrated offering that we have to provide our clients with. Digital is a critical component of it and goes into the overall mix. What we are seeing is an extreme competitive price competition from the clients and our competitors, therefore we have to learn to be more efficient and value our service in a different way, which aligns more with a pay for performance structure.

Some of your competition is aggressively adding digital capabilities through the acquisition route. We have not seen you make such purchases – how are you viewing to augment your digital offer?
We bought Huge but it was not a big announcement because it was not a big company. That said, now it is a global digital offering. We do a number of digital transactions throughout the year but we look at it as fitting into a larger strategic piece, whether it means for a market that we need or a specific skill-set. We signed on Interactive Avenues in India earlier this year for instance with that in mind. We look at it from a very strategic point of view and then growing it organically rather than paying huge prices. If I thought we were at a digital disadvantage, then I would be looking at these big mega transactions. But I find that we are not. We compete against these companies and win, so why spend on these companies when we know that we can grow such offering organically and in our own way which is a lot better on various fronts such as creating the company culture, ensuring talent retention and working with a common goal.

The last time we met you had said that you were looking to bring in better collaboration within IPG operating companies to create a more robust offering. What has been the progress on that?
Quite a lot, in fact. If you look at the last three major wins we have had – SABIC in Saudi Arabia, Zurich Insurance Group or Cadillac, they are all collaborative IPG wins. Take Cadillac for example, we have created Hill Holliday for the magic, the machine is in the form of Campbell Ewald and there is Lowe for its expertise and experience. The great thing about this was that when you looked at the pitch, we had approached it as one team and no silos in a true sense. My promise to Bob Ferguson (General Motors, Vice President, Global Cadillac), was that it is my responsibility to ensure that it is a seamless offering. There are individual responsibilities but we are a team and we can see the difference we make in working like this. From a client’s perspective as long as they are comfortable, this is a great way to go to market.

Another area where IPG took some interesting decisions was in choosing your leaders, such as the appointment of Mr Harris Diamond in McCann Worldgroup, who essentially had come from a PR background. What is your thought process in such decisions?
The most important thing is to find someone who is talented and brings experience in dealing with clients in the services business and knowledge of the marketplace. You don’t have to have very specific skill-sets. If you take my example, I did not have any advertising background and yet here I am running a holding company. When I look at positions in my company that need to be filled, I look for the best people and then I make sure that they are surrounded by very talented people if in the beginning, they are need a learning curve. So in Harris’ case, Harris ran Constituency Management Group for us, which is one of the most important segments of our business. He is very good at the marketplace with clients, he is a great businessperson and I felt that is what was needed at McCann.

The question was whether he had any advertising background. So with Gustavo (Martinez) and Luca (Lindner), who together make the office of the Chairman, he has got the team that he can rely on, which he is using quite effectively. Look at the example of Jacki Kelley (CEO, IPG Mediabrands North America). Her background was not in media but you take talented people who are smart, and I will take those type of people instead of someone who has a great resume but cannot focus on the bigger picture. I am doing that right now and I am pleased with the changes.

Would you say eventually experience in digital would become important for key positions?
These days everyone has had some kind of digital experience and background. Not necessarily in the code-writing or the algorithms part of it but had worked in a digital environment. In Harris’ case, Weber Shandwick has had significant experience in digital. The awareness and experience and hence the broader picture, that is most important.