It's discomforting to speculate on someone else's career, but the most popular parlor game in the ad agency business is guessing which executives involved in the mess at Interpublic Group of Cos. are likely to be job hunting. The lead candidates are Interpublic Chief Financial Officer Sean Orr and McCann-Erickson WorldGroup CEO Jim Heekin. There are also murmurs about Interpublic top dog John Dooner, but oddsmakers discount them, not necessarily because of confidence in him but because of his client ties and the lack of an obvious candidate to succeed him as CEO.
During a recent discussion about Interpublic, one of my colleagues opined that it would be a shame if Dooner, a veteran adman, were replaced by a "bean counter." Yet given the sprawl and complexity of the holding companies, a numbers person may be what's needed. Investors give Dooner little credit for being the only advertising practitioner in charge of a Big Three holding company. ("An account guy in over his head," is how one Interpublic insider describes Dooner.)
Even in that role, his performance is mixed. He appeared to misjudge the extent to which client conflicts still matter to marketers, leading to account losses at True North agencies after Interpublic acquired that holding company. And he's shed little light on his plans while allowing speculation to flow about shakeups at Interpublic shops.
All three Interpublic executives may ride it out, of course. But if the bad news continues-"the death of a thousand cuts" one consultant called it-little short of regime change could begin to restore investor faith in Interpublic (and in the advertising holding company sector).
Communication is a big part of the problem. The Dooner team in mid-August said it would restate Interpublic financials by $68.5 million due to improper accounting at McCann's European operation. Later, it boosted the potential restatement to $120 million, then to $181 million. Wall Street hates surprises, which could explain why the Securities and Exchange Commission is taking an "informal" look at Interpublic's accounting.
As an outside observer, the idea that no one has been held accountable is incomprehensible (though McCann-Erickson finance chief Salvatore LaGreca recently left the company). For Dooner, the harsh truth is there has been speculation for more than a year about his grip on the top job. The rumors always included the idea that Phil Geier, Dooner's predecessor, could return. The irony is that Dooner supporters privately insist his woes were inherited. (Geier himself recently offered support for Dooner that was lukewarm, but strong enough to essentially rule out a Geier return.)
With each new financial restatement, it becomes more difficult to avoid the possibility of change along the Interpublic chain of command. Reuters noted on Nov. 12 that "top executives at [Interpublic] ... are under pressure to put accounting issues to bed once and for all."
The financial turmoil at Interpublic has raised questions from some about the continued viability of the holding company model. Critics grouse that the problems are an inevitable result of consolidation that has forced holding companies to focus on Wall Street at the expense of clients.
Dooner is now searching for a chief operating officer. If the right person is hired, it could go a long way towards restoring credibility and easing the pressure for management changes. But there's a lot more work to be done, a thousand cuts to be treated, before anyone at Interpublic can consider his position secure.