CEO’s ‘We’re the next one to be consolidated’ comment does not signal imminent merger, says Interpublic

Roth

Interpublic Group, the holding company for agencies McCann, Lowe and IPG Mediabrands, has said that a quote from the company’s boss Michael Roth in The Economist’s special report on advertising and technology was taken out of context.

In a section on the impact of technology on advertising agencies in the news and current affairs magazine’s 12-page special report on the industry, the IPG chairman and CEO was quoted as saying: “We’re the next one to be consolidated.”

An IPG spokesperson told Mumbrella Asia that Roth was repeating a comment that he had said many times about the consolidation of the industry in the past, and did not mean to suggest that a merger was imminent.

The assertion comes five months after, in the wake of the failed merger between Publicis and Omnicom, Roth sent a memo to staff to reassure them that the company, which is the world’s fourth largest ad agency group, would not be looking to merge with a rival.

The Economist report, published on Friday of last week, reads: “Now agencies are looking for salvation in numbers. Last year Omnicom and Publicis announced plans to merge to become the world’s largest advertising holding company. The deal fell apart because of personality clashes, but more consolidation is likely. Sir Martin Sorrell, the boss of WPP, predicts that within five years there will be even fewer independent advertising firms. Michael Roth, the boss of IPG, says matter-of-factly: “We’re the next one to be consolidated.”

Roth had told staff in the memo in May: “With the breakdown of the “POG” merger, competitors who have no knowledge of the situation are raising speculation about the possibility of future consolidation in our industry and what this might mean for us. As I have said before, there is no compelling reason for IPG to merge with another firm – we are competing at the highest levels and are winning business from our largest peers. We do not have gaps in our offering, either geographically or by marketing discipline, and we are backed by a powerful balance sheet.”

The Economist report goes on to argue that while ad tech firms are “gleefully forecasting the imminent demise of Madison Avenue’s middlemen”, they may not prove to be right.

Ad tech, the report reasons, has brought in so much complexity to the business that clients will probably want to hold on to agencies for “advice” and to help them produce “so many different pieces of content” that ad tech firms cannot deliver.

Also, the likes of Google will not begin competing with ad agencies “head-one”, the report reckons.

“To provide full client services they would need to hire thousands of new employees, for limited gains,” the report reads.

Highlights from The Economist’s report, which looks at how technology is bringing change to publishers and agencies, can be read here.

Robin Hicks