IPG homes in on new model for media agencies

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After considering sweeping changes to its media operations, including the merger of Universal McCann and Initiative Media, Interpublic Group of Cos. is weighing a less drastic measure: the creation of a single advisory board to oversee its media buying and planning properties.

Such a move would see Interpublic following fellow advertising giant Publicis Groupe, which recently created a nine-person board to coordinate the resources of Starcom Mediavest Group and ZenithOptimedia. The chairman of the board would effectively oversee all of Interpublic's media holdings.

Interpublic is looking both inside and outside for contenders to head its new media entity. Preliminary talks with former Leo Burnett President Bob Brennan fell through, according to an executive familiar with the discussions. Mr. Brennan declined to comment. Publicis Groupe, by comparison, went with a team culled from inside the holding company and its properties, tapping Publicis chief operating officer Roger Haupt.

The creation of a board is one of the less dramatic options said to have been on the table during a course of discussion that's lasted about four months, according to executives familiar with the matter. Others include a merger of the two media buying companies with the 3-year-old negotiating unit Magna, a move that would see one or two of the brands disappear, or the folding of Magna into Universal McCann. Observers said these discussions, which have included executives from the media agencies as well as Interpublic and are being led by McCann Erickson Chairman-CEO John Dooner, are far from over and could extend past Interpublic's own yearend deadline.

"We have two strong and competitive media brands, which we have no intention of merging," said Interpublic President-CEO David Bell in a statement.

The creation of an advisory board would likely cause fewer conflict issues for clients than a full-on combination of two media buying brands. Initiative handles media for Time Warner's America Online and Home Depot, while Universal McCann counts Microsoft and Lowe's among its clients. A merger of the two would be understandably problematic for these clients.

Indeed, Mr. Bell has previously hinted publicly that such a move could be in the future. In his third-quarter conference call with analysts earlier this month, Mr. Bell said: "As a number of our competitors have further centralized their media offering, they have invested aggregately in some tools and analytics that we have been doing separately. Clearly as we move forward our objective is to take the best of both of our media units and take that to the next level."

In the same call, Mr. Bell also said that the company would "focus on what we believe to be our lead in the entertainment area, which we'll invest in going forward."

struggling

Late this summer, when Interpublic executives began evaluating its media offerings, the shops were already struggling. Since then, Universal McCann has lost $400 million worth of Nestle business in the U.S. and Latin America and Initiative lost $650 million in Unilever's Western Europe media review. Initiative is also certain to lose a portion of its Samsung business, following the electronics marketer's global review, but how much is uncertain.

The advisory board scenario begs as many questions as it answers.

It leaves unanswered the fate of Magna, which could either remain a negotiating unit or take on the role of the advisory board. The 3-year-old company has been criticized for adding an extra layer of negotiations to the buying process.

The scenario would certainly facilitate greater coordination among the media units-something even insiders say is much needed-and potentially put Interpublic on even footing with agency holding company rivals including not only Publicis but also WPP Group, with its Group M and Omnicom Group's Opera.

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