IPG's Michael Roth Outlines Road to Success for Agencies

By Media Insights Archives
Cover image for  article: IPG's Michael Roth Outlines Road to Success for Agencies

View the full Jack Myers Leadership Conversation with IPG Chairman Michael Roth here. Let's face it, the agency business was already under stress before the pandemic, with consolidation and in-house marketing businesses creating a smaller, scrappily competitive ecosystem. Then came the pandemic and advertising budgets dried up as did consumer demand in certain sectors. The need for agencies to change and adapt increased exponentially. In all of this chaos, Michael Roth, Chairman and CEO of Interpublic Group, remained calm, assured that his company is well placed to not only maintain its industry dominance but also excel.

Roth joined MediaVillage Founder Jack Myers for a Leadership Conversation and revealed how he is shepherding his company not only through the uncertain economics of the pandemic but also demonstrating his continuing commitment to diversity and inclusion within his company and throughout the industry.

IPG's Philosophy

When it comes to the state of IPG within the media ecosystem, "I like to view ourselves as the best looking house in a bad neighborhood," Roth deadpanned. "The bad neighborhood is the marketing and communications companies and we have outperformed our peer groups for the last five years… in terms of share performance and financial performance." It's clear to Roth that the industry, "has to change to be competitive with all of the new entrants into the marketing and communications side of the business." Under his leadership, IPG began to address these challenges years ago. "That is one of the reasons we continue to out-perform," he noted.

From when he first joined the IPG board, he saw some disturbing fissures in the agency model that didn't make economic sense. "The holding company model was structured as a series of roll-ups… Because of conflicts, the holding companies went out and bought up more agencies because with more agencies you could have less conflicts (because) you use a separate shop," he explained. But, "If I can field the best team in the business and put it up against my competitors why isn't that a better proposition than having three agencies of our own competing with the others." This change in outlook led to an open architecture, putting in place an IPG team, "comprised of the best brands we have that can meet the needs of our clients irrespective of what brands they were," he stated. The success in that philosophy is evident in the overall business success of the company including the share price.

The Importance of Synergies and Partnerships

The commitment to an agency model of open architecture has proven to be the competitive solution to attracting and retaining business. "What better relationship can you have with a client if the client knows that you are looking out for their interests not just yours," he stated. If McCann World Group, for example, knows that sister agency FCB has a better offering that fits for the client, "how powerful it is to say, 'let me call FCB into the picture and let them come in and provide their expertise to work with us.' We are not giving up the relationship to solve your problem." When Roth brought this idea of open architecture to the agency world, he met with some pushback. "But think about it," he posted, "if we don't have, which is unlikely given the size and depth of our company, a resource, then we would bring in an outside resource to help." This demonstrates a real commitment to high quality agency service from the client perspective.

Data is Central to Success

Media has historically been a simple transaction type of business. But technological advancements and the proliferation of screens has made it more complicated and, in some cases challenging. According to Roth, for years, strategy discussions with the board included the need for data and analytics. "First party data management and data is critical to finding the right consumer where and how," he explained.

"If you start with the premise that you are looking at the client first, we are in a marketing and communication business and we have all these other assets that we can bring to the table. We have PR, sports marketing, experiential, media, digital capability. The question is, how do you find the consumer that's relevant to the client and how do you create a message that is relevant to the consumer and that is trustworthy and relevant to what they are looking for?" For Roth, his company has all of these resources, but, "the missing ingredient was the data and analytics part of it." To solve for this, the company acquired Acxiom. "When Acxiom came on the market, I said to the board, we're going to kick the tires. The more we looked, the more we realized that this is what we've been looking for," he noted, "Two thirds of the Acxiom business is first party data management so it wasn't just info-based, the third party data that people use to locate consumers."

Data Adds to the Creative Juices and Content

Data also informs the creative process at IPG. For Roth, just knowing where the consumer is doesn't give the full picture. "You have to know what their likes and dislikes are, what their habits are and the data and analytics provides this insight into the consumer," he stated. Instead of buying audiences, he added, "we are able to buy consumers, real people." By adding motivational purchasing insights into the creative process, "it resonates and brings the messaging to life," in the form of, "data driven marketing."

Throughout the process, creative juice is vital. Priceless for Mastercard, for example, "is the billion dollar idea," Roth noted. But, he added, "What do you do with that once you have it? You have to reach the consumer. You have to have a relationship with the consumer." As the media landscape expands with a myriad of new ways to reach the consumer, it is the creative juice that demonstrates why that brand offers greater value and preference to offset price considerations.

For Roth, it is vital to remain agnostic when it comes to media. His agency doesn't own any media companies. "Some of our competitors take equity positions in media so they're not agnostic," especially when they advise clients to allocate dollars to a medium where they are using their own inventory. "The future of this business is value proposition," he added. He warned that, "If you don't have transparency, forget it… We are supposed to be agnostic. We are supposed to be an independent arbiter of where our clients should spend their money. And if we are not transparent then how can they rely on us that we are getting them the right answer." He added that, for media choices, "Content is king. People are going to go where the content is." He predicted that those media companies that offer, "the best content, best analytics, best pricing and transparency will prevail."

The Focus on Diversity and Inclusion

Roth explained his long term commitment to inclusion and diversity is grounded in his childhood upbringing. Brooklyn born; he grew up in a diverse neighborhood. "It was part of the way I lived," he explained, "It resonated with me in terms of how well it could work." So the importance of bringing diversity and inclusion into the workplace figures prominently in his goals. Also, as the son of a working mother, there is the "desire to see women also advance in business." To that end, "the initial movement in IPG was the focus on women's representation." Forty percent of IPG's board is female.

Roth acknowledges that more needs to be done to advance diversity at both IPG and in the industry. Upon joining IPG, "I knew that the only way I was going to get our organization to pay attention was to hold them financially accountable," he remarked. "So starting in 2006 all of the CEOs of IPG had in their incentive targets diversity and inclusion goals. They weren't quotas. They were goals." Roth added that he thought his was the only company that held its agencies financially accountable for diversity. "But we have to go deeper," he admitted. "This is critical to the future of our business and our society."

Agency hearts may be in the right place but there are obstacles to those who might otherwise enter a career in advertising. Entry level low compensation and the unclear path to upper management are two that, Roth agreed, need greater consideration.

The Road Ahead

For Roth, the future of the business relies on open architecture. This works, "because we are working together to solve problems. We are not working to sell our product," he explained. "In the consulting part of the business we are developing business solutions. All of these come together to help our clients solve business problems, not just create an ad. It is that partnership, that relationship that will sustain our industry going forward. But you have to have the goods, the people who can do it, understand it and the compensation has to be appropriate," he concluded.

Also read:
Watch Now - IPG CEO Michael Roth: How to Take Action and Make Change Happen

IPG CEO Michael Roth: How Open Architecture Transforms Business and Drives Growth by David Berkowitz

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The opinions expressed here are the author's views and do not necessarily represent the views of MediaVillage.com/MyersBizNet.

 

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