By Shambhavi Anand
IPG is coming off a bad year with a significant decline in net income. What are the reasons for this? How’s 2014 looking?
We did not achieve our goals and the primary reason for that were problems in Europe. We took a restructuring charge of $61 million to rightsize our cost profile. We also had some new business wins and expenses, and cost to pitch for new businesses ahead of revenues. Some of our agencies were not performing well. We took care of that in the restructuring so those were the reasons we could not deliver the margin we were looking for. The restructuring charge should give rise to $40 million benefits in 2014 and growth in the range of 3%-4%. We expect to expand margin by at least a 100 basis points.
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Michael I. Roth
Michael I. Roth is Chairman and CEO of Interpublic, one of the world’s largest organizations of advertising and marketing services companies. Prior to serving in his current role, Mr Roth was a member of the company’s Board of Directors.
Since assuming leadership of Interpublic in 2005, Mr Roth is credited with righting the company’s financial course and moved to make it an industry leader by defining new models that provide value to clients in a rapidly-changing media and marketing environment.
Prior to his current role, he was Chairman and CEO of The MONY Group Inc., a financial services holding company that provides a wide range of protection, asset accumulation and retail brokerage products and services through its member companies.
A certified public accountant, Roth holds an L.L.M. degree from New York University Law School and a J.D. from Boston University Law School. He is a 1967 graduate of the City College of New York.
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Given the Indian economy has been sluggish for a while, how has that changed or affected IPG’s hopes?
The fact that we brought our board of directors here even though there is a slowdown indicates how important India is. Every market is going through a slowdown but the opportunities India offers are immense. We wanted to send a message to everyone that India is important to us. It is our second largest market and some of our best brands Lowe, FCB and McCann are continuing to grow.
How do your clients feel about India as an investment destination?
We invested in three acquisitions in India – Interactive Avenues, End to End Marketing Solutions and Corporate Voice. They show the confidence we have in the future. Macro economic conditions affect the environment in every economy. But with the kind of growth we have had, we can work through difficulties. Even in tough situations India has grown at 5%-6%, which is good. In the United States growth is around 2%-3%.
What’s your evaluation of your Indian operations? Are you looking at any further acquisitions?
We have done very well here. Including the acquisitions our growth is somewhere around 70%. We bring all the IPG offerings to the table here in India. We are always looking for acquisitions in various markets. We want to hear from our agencies on what’s substantial on the horizon. For us digital and activation seem to be the two most important areas of interest. That is one of the reasons we came here. But please don’t ask me to name names.
Would you care to address the speculation that a merger between WPP and IPG is imminent?
There used to be speculation about IPG and Publicis too. But there is no need to do a transaction like that. We have all the global offerings and disciplines to be competitive. We don’t need capital. The only reason we would do something like that is when somebody put a compelling price for shareholders on the table.
But no one has done that so far. How do you believe the Publicis Omnicom merger will affect the industry?
Whenever a transaction of this kind happens it will take a long time to be integrated. In this case, it is taking a long time even to happen, and in the meantime there will be disruption. We are seeing recruiting opportunities. There are disruptions in a number of their offerings and we hope to be a beneficiary of that. Obviously, there will be conflict potential, although the transaction has not taken place yet, so we haven’t seen a lot of it. We don’t view it as a threat. Everyone thinks that their media offering will be big. But it will be as big as WPP and we have proved to be very effective against them. Not being so big that we can’t be flexible and responsive to clients needs and provide the human touch. The answer is I don’t go home and worry about it.
How has IPG Mediabrands which is competing in many markets where the other media agencies have a bit of a headstart doing?
In 2013, Mediabrands was our best performing asset. So that is a pretty good indication that they are doing well. We don’t give specific figures on the profitability of our agencies but clearly both in India and on a worldwide basis they are leading us on growth, revenue and margin expansion.
Source:The Economic Times
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