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IPG's Roth on Publicis-Omnicom: 'Bigger Doesn't Make for Better Creative'

Sees No Need for Major M&A Deal, but 'No Telling What Might Take Place'

Published on . 4

Michael Roth
Michael Roth

If the advertising industry seemed caught off guard by the announcement of the Publicis-Omnicom merger over the weekend, it's partly because many expected the next super-size deal to involve Interpublic Group of Cos. And while others made their thoughts known in the wake of the news, the one holding-company chief holding his fire up to now had been Interpublic CEO Michael Roth.

But in a memo to employees today, Mr. Roth offered a long and detailed take on the merger, calling first and foremost for a sense of perspective. Noting that previous waves of mega-mergers have swept other industries, he said expectations for such deals often didn't match up to reality. In terms of the ad industry, he added that "there's nothing about being bigger that makes for better creative ideas, or leads to better integration of marketing disciplines."

And, addressing the annual merger rumors that involve Interpublic -- as well as predictions by someone that a new merger mania may be on the horizon – Mr Roth wrote: "There's no telling what might take place, but we don't see the need for major M&A to keep delivering on our plan to move Interpublic forward."

Read the entire memo below:

Too Big to Fail:

A significant event in our business took place this past weekend, with the announcement that Omnicom and Publicis will be merging. The press reports and industry speculation that will result from this news would have you believe that everything in the world of marketing and advertising will be forever changed on account of this combination. That scale will trump creativity and insight. And that we are headed for a new round of consolidation and deal-making unlike anything we've seen in our sector for almost a decade.

Some perspective is obviously in order.

First, from my time in the financial services sector, where a wave of mega-mergers resulted in global giants whose size and clout were supposed to make them invincible -- except things didn't play out according to that plan. More important, from my more recent experience in our industry, which has clearly taught me that there's nothing about being bigger that makes for better creative ideas, or leads to better integration of marketing disciplines, which is what our clients need most in order to succeed in today's complex media and consumer landscape.

It goes without saying that we'll all be asked about what the new combination means by our clients, colleagues, friends and family. (Of course, if the question comes from a reporter or financial analyst, do not comment and refer them to me). For all other audiences, the answer should be that, like with any significant market development, this change could create opportunities and challenges. But we know both Omnicom and Publicis well, so competing with the merged entity and winning is not something we're unfamiliar with. Going forward, there's no magic to what we need to do in order to be successful -- stay committed to our clients and to the quality of our work. You can count on us to do the same, as well as to continue to invest to make our offerings even more competitive.

Nothing is as important in our business as deep client focus, which has nothing to do with whether an agency is large or small, or how it's organized, and everything to do with a culture which values and promotes service. Let's keep that top of mind, reach out to our clients and assure them that they'll keep getting the best thinking and capabilities in the business from us, across the entire marketing spectrum. While our competitors may be distracted by all the commotion around the merger, or the work of integrating their companies, let's make sure we stay focused.

However, there are a few specific questions that seem to be getting a great deal of attention in the wake of yesterday's announcement and that deserve to be addressed:

One has to do with the media clout of our newly-merged competitor. For some time now, we have been competing effectively in the media arena with an offering that was smaller in scale than that of our peers. But our more strategic approach -- with strong digital and content capabilities, a more collaborative relationship with the media owner community and an industry-leading pay-for-performance model -- has been performing very well for our clients. We expect that to continue.

Another significant issue that we'll be hearing about has to do with the degree to which digital was a driver of the merger and whether this is a space in which bigger is actually better. We remain well positioned in this regard, across the group. At our media operations, where every month we process hundreds of terabytes of data, supporting billions of real-time buying decisions and in public relations, where we have the industry's largest and best practices in social media and content creation. Throughout our full-service agencies, which have integrated digital into their core offerings, outstanding creativity goes hand-in-hand with a full range of technical expertise, from coders to user experience designers and data experts. Not to mention our best-in-class digital specialists such as R/GA and Huge, which are building out their global presence and can partner with other IPG agencies to complement their expertise.

Finally, there is the question of whether we intend to link up with another agency in order to remain competitive. As this weekend's surprising news shows, there's no telling what might take place, but we don't see the need for major M&A to keep delivering on our plan to move Interpublic forward. We've come a long way during the past few years. Together, we've proven that we have the talent and agency brands to compete and win across our offerings. More recently, we've begun to consistently demonstrate the ability to come together and deliver customized, cross-agency solutions (like those for Zurich and Cadillac) that beat those of all our holding company peers. Our expectations are to see more of this type of success, driven by our collective talent and dedication.

In closing, let me end by sharing with you what I'll be saying to the press when they call for our perspective on the Omnicom and Publicis merger:

"Our focus is and will remain on our clients and our people -- which are the strength of our company. There's nothing about scale that makes for better creative ideas, or leads to better integration of marketing disciplines. We are confident in the quality and competitiveness of our digital and media offerings, and well positioned in emerging markets. Ultimately, we're all about our clients' success and we intend to keep it that way, so that we can in turn build on our positive momentum in the marketplace."

-Michael Roth

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