IPG explores sale of R/GA

Interpublic Group of Cos. is exploring a possible sale of R/GA, and TCS Interactive is the front-runner to acquire it, according to six people close to the situation. Other holding companies and consultancies have also taken a look at acquiring R/GA, multiple sources confirmed. A strategic partnership, rather than an outright sale, is also on the table, according to a person close to the deal. TCS declined to comment and IPG said it does not comment on rumors and speculation. The potential sale of R/GA would mark the latest example of IPG divesting its agencies. The holding company has also been merging and shutting some of its agencies in an attempt to simplify its structure. Some of R/GA’s biggest clients include Nike, Verizon and Google. Acquiring R/GA would mark a major move for TCS Interactive, an Indian-based business looking to expand its presence, especially in the U.S. Led in part by former Droga5 CEO Andrew Essex, TCS Interactive is the digital services business of Tata Consultancy Services, one of the world’s largest internet technology and consulting companies. TCS Interactive, the company’s digital marketing, transformation and user experience unit, posted $2.8 billion in revenue last year, according to Ad Age’s Agency Report, which ranked the entity as the 13th largest agency company globally. Check out the latest Ad Age events and award programs For the fiscal year ended March 31, TCS reported global revenue of $29.1 billion. By comparison, advertising’s largest holding company, WPP, posted over $18 billion in revenue last year. R/GA and Huge, another IPG digital agency, have struggled recently, with both experiencing a series of layoffs and leadership changes over the past couple of years. Both have also undergone significant restructurings in an effort to adapt to a changing digital market. IPG did not break out revenue for R/GA in its recent reports. Both R/GA and Huge have been cited in several IPG earnings reports as negatively impacting results for the holding company. In February, as part of IPG’s full-year earnings report, IPG CEO Philippe Krakowsky said that the company’s digital specialty shops, among other factors, “significantly weighed” on results (R/GA and Huge are often referred to as “specialty digital agencies” on earnings calls.) In an April earnings call, Krakowsky said the company was going to explore ways of augmenting its assets through mergers and acquisitions, “with a particular focus on further broadening our commerce and digital transformation capabilities.” R/GA was founded in 1977. It became part of IPG in IPG’s 2001 acquisition of True North Communications, the holding company for FCB, R/GA and other agencies. At its peak, R/GA was one of the most innovative agencies in the industry, and many still regard it as such. But the agency has struggled to adapt to a challenging market as especially tech clients continue to pull back on spending. In addition to Google, Verizon and Nike, the agency also works with Intuit TurboTax, for whom it created a Super Bowl spot this year, and BBC Studios. The agency currently has approximately 1,200 employees globally. R/GA over the years adopted what it called a “distributed creativity” model as a way to become more flexible and less reliant on teams defined by physical offices. Last year, R/GA moved into IPG’s new innovation-focused office space in the Brooklyn Navy Yard. IPG has been busy as of late. In January, the holding company sold two creative agencies, Hill Holliday and Deutsch New York, to global marketing services group Attivo Group. In March, IPG merged Tierney with Carmichael Lynch, and data-led creative agency Performance Art was folded into McCann. McCann’s San Francisco-based McCann 215 shut down in March. In May, IPG Health integrated McCann Health New York into healthcare agency Area 23, and Hill Holliday Health and McCann Health New Jersey combined to form a new entity called Rise & Run. Contributing: Garett Sloane and Bradley Johnson

IPG explores sale of R/GA

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