He replaces Lou Schultz, who resigned earlier this year.
Mr. Gerster, 54, who is currently CEO of Grey Global Group's MediaCom Worldwide, will join Initiative April 22 and report to David Bell, vice chairman of Interpublic.
Mr. Schultz left Initiative following a string of business losses, including the shop's marquee $500 million Walt Disney Co. account. Most recently, the shop was dropped from the $100 million Sun Microsystems review, in which it was the incumbent.
With all the business hemorrgaging from Initiative, Mr. Gerster is taking on a challenging assignment. He told AdAge.com that he is up to the task.
"Initiative is a wonderful collection of assets," Mr. Gerster said. "There are some very interesting companies in there. A wonderful heritage. I have always been a fan of the local broadcast market, and they have wonderful strengths there."
Meanwhile, MediaCom announced Chief Operating Officer Alexander Schmidt-Vogel will replace Mr. Gerster. Dene Callas and Jon Mandel, co-managing directors of the company, are being promoted to co-CEOs of MediaCom U.S.
Mr. Gerster's appointment took the ad industry by surprise. The unoffical list of possible candidates for the job circulating among ad executives included David Verklin, CEO of Aegis Group's Carat North America; Steve Farella, former CEO of Havas Advertising's Media Planning Group USA; and even Irwin Gotlieb, CEO of WPP Group's MindShare. But few mentioned Mr. Gerster, who once worked with Mr. Dooner when the latter was at Grey.
Perhaps one of the reasons why Mr. Gerster's name was not floated was that he has significant holdings in Grey, which has been pegged as ripe for acquisition by larger holding companies.
"Alec was in line to make a windfall," said one top ad executive who requested anonymity. "It looks like he's just giving that up."
Initiative claimed billings of $20.1 billion and has a client list that includes Johnson & Johnson, Unilever, Cisco Systems, Home Depot and Time Warner AOL's America Online.