John Dooner and Phil Geier may be veterans of the ad business, but as the two team up to run Interpublic Group of Cos. it's a whole new game.
The executives are focused on remaking Interpublic, a traditional ad-focused holding company, into an integrated marketing stronghold.
That's the strategy Mr. Dooner, 51, will continue to pursue as he joins Chairman-CEO Geier, 65, in the upper management suite of Interpublic this week. Mr. Dooner, chairman-CEO of McCann-Erickson WorldGroup, becomes Interpublic president and chief operating officer, and will be named CEO on Jan. 1, 2001. The succession move by Mr. Geier, who took control of Interpublic in 1980, was widely anticipated.
"Interpublic created the first holding company and expanded beyond advertising to work on how to bring various competencies to bear on clients' needs," Mr. Dooner said. "[McCann] WorldGroup is a model of that . . . and Lowe Lintas & Partners is moving aggressively to create that model."
It was just six years ago--at the same time Mr. Dooner took over what was then a $7 billion McCann-Erickson--that Mr. Geier presided over the holding company that got 90% of its revenue from ad networks.
NON-TRADITIONAL INCOME TO GROW
Today, McCann tops $20 billion in billings and Interpublic derives almost half its income from diversified services such as direct marketing and interactive. That income is expected to grow as the holding company continues to build out and bulk up its integrated marketing capabilities.
Some companies will be kept as separate units and report directly to Interpublic, while others will be more closely allied with agencies under Interpublic's wing, Mr. Geier said.
The investment community responded favorably to the news with Interpublic stock ending the week at $43.75, up more than 2 points.
"We see this as a positive move," said Bear Stearns analyst Alexia Quadrani. "We've never been positive on the stock . . . but with the Lowe Lintas merger and the NFO (Worldwide research company) acquisition, now this might be the change that turns the tide. Dooner has a great reputation and we think it's got to be a good move."
About future investments, Mr. Geier said, "We need to make sure first that it makes sense for our clients; that they fit in terms of chemistry with the agencies and, third, that we'll get a reasonable return on our investment."
Mr. Dooner wouldn't rule out the possibility of a third agency network acquisition during his time at Interpublic--if it makes sense.
"We'll look to expand the charter of Interpublic," he said, "First, in those business areas that help our clients do a better job. Also in consumer knowledge and strategy, and possibly in another network."
AGREEING ON STRATEGY
Mr. Geier, who will remain chairman after Mr. Dooner becomes CEO, declined to elaborate on his tenure plans. Although the men's styles vary, with Mr. Geier as the more stately and austere businessman and Mr. Dooner as the more disarming and affable leader, the two seem to agree on most things Interpublic.
"Tactically maybe we've had differences, but strategically we have very rarely, if ever, disagreed," Mr. Dooner said.
Jim Heekin, president-CEO of McCann-Erickson Worldwide, is poised to take on Mr. Dooner's McCann WorldGroup role. That decision will be formally announced at an April 3 McCann WorldGroup meeting.
Interpublic agencies work with some of advertising's biggest spenders, including Burger King Corp., General Motors Corp., Microsoft Corp. and Sprint Corp. Interpublic ranks as the world's second-largest holding company in gross income, behind Omnicom Group, New York.
Copyright March 2000, Crain Communications Inc.