Why it will cost IPG more than $60m to fix Europe

Unknown-2What on earth is Interpublic (IPG), which owns McCann, Draftfcb (or is it just FCB?), media agencies UM and Initiative and a gaggle of PR companies, going to do about Europe?

It quietly announced last week that it’s to take a $60m hit to ‘align costs with revenue’ in the region, in other words get rid of people without enough to do. Europe posted a 4.3 per cent drop in organic revenue for the fourth quarter, 5.3 per cent for 2013 as a whole. This at a time when its rivals, most notably Publicis Groupe (in the process of merging with Omnicom) were benefiting from a subdued recovery in Europe.

IPG has two big problems in Europe. One is that its media agencies have been left behind by the likes of WPP’s mighty GroupM and, to a lesser extent, the Omnicom media line-up (Publicis has its own problems with underpowered ZenithOptimedia and Starcon MediaVest).

The other is that, outside McCann which has been under pressure recently too, its other ad networks – Draftfcb and Lowe – have only a patchy footprint globally, including Europe. IPG tried to bolster Lowe in the UK with the purchase of DLKW (which has been only a moderate success at best) while Draftfcb has recently bought second tier London creative agency Inferno.

Such surgery is unlikely to be the complete answer if cuts are being made elsewhere in the empire, which will result in some good people leaving. In the UK the company lost Roy Jeans, CEO of out of home agency Rapport, who had built a highly successful and profitable business from the formerly moribund IPM.

IPG boss Michael Roth (above) needs to show some vision (or find someone with some, maybe a buyer) if IPG, which now lags Aegis/Dentsu in the global stakes, is not going to a big player in the Americas with some outposts in the Far East and not that much else.

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About Stephen Foster

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Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.