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Michael Roth | Our India agencies are growing in double digits

Michael Roth | Our India agencies are growing in double digits
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First Published: Thu, Nov 03 2011. 10 37 PM IST

Market focus: Michael Roth. Photo: Pradeep Gaur/Mint.
Market focus: Michael Roth. Photo: Pradeep Gaur/Mint.
Updated: Thu, Nov 03 2011. 10 37 PM IST
New Delhi: The world’s fourth largest advertising network, the Interpublic Group (IPG) has a presence in India through its agencies McCann-Erickson, Lowe group and Draftfcb Ulka. However, it was AdAsia, the industry’s prestigious Asia Congress held in New Delhi, that brought the group’s chairman and chief executive officer Michael Roth to the country on his first visit since he took charge at IPG in 2005.
Roth, who moved from a financial products and services company to advertising and has been closely associated with IPG’s turnaround in recent years, fielded questions on the network’s challenges and plans. Edited excerpts from the interview:
What does the latest slowdown look like?
Market focus: Michael Roth. Photo: Pradeep Gaur/Mint.
We had very positive results recently. We started the year with 4-5% organic growth and at least nine and a half per cent margin. I reiterated our targets and believe that we should do slightly better. So, even in this difficult environment we haven’t seen significant client pull -back. Although there is a lot of uncertainty and a lot of our business comes in the fourth quarter, we feel confident to deliver on our objectives.
Any numbers you could share?
Let me focus on India. In the third quarter our organic growth was 19% and in the first nine months our organic growth was in excess of 20%.
In 2010, your global turnover was $6.5 billion. Of this, the percentage from India must be very small.
It’s growing. If you look at our percentages, 60% of our revenue is in North America, 20% is in western Europe and 20% is in the rest of the world, which includes Asia-Pacific and Latin America. And that number, which is 20% now, not too long ago was 14%.
Is growth in digital media turning advertising agencies into technology companies?
At my presentation at the Web 2.0 summit at Silicon Valley, they asked me the same question. We aren’t a technology company but we have to be well versed in technology and enhance the services to our clients. We also have Emerging Media Labs where we experiment with new technologies.
Are Emerging Media Labs new investments?
I would say about three years (old). But the one we have in New York is opening on November 10. That would be state-of-the-art.
What happens in a media lab?
We experiment with new technologies, mobile, shopper marketing and all the fancy new ways of communicating with the consumer. And we do it on a real time basis. We let a lot of start-up technology companies to test there.
Globally, you earmarked $150 million for acquisitions. Did you use up all the money?
Each year, at the planning stage, we set aside that kind of money. We used up most of it, not all of it. We did about 11 or 14 acquisitions...some small ones in India but mostly outside of India. In 2011, we will continue to look at transactions. Certainly India is an important growth opportunity for us...we would look at digital, media. But I can’t mention any of them.
How much would you acquire?
Eventually, we would like to control any transaction. We may start with 51% interest with the ability to get up to 100%. For example, three years ago, we bought the rest of our interest in Lowe Lintas and Draftfcb Ulka. We now own 100% of both.
Of the three brands Mcann-Erickson, Draftfcb Ulka and Lowe, which one is doing well?
All of them are growing at double digit rates and they are all performing well.
Some years ago McCann-Erickson was hit by an accounting scandal in the US. How is the agency doing now?
All those issues are behind us. In fact, recently two of the three ratings agencies have graded us as investment grade. We have embarked on a transformation at McCann with new leadership. In India, McCann just won the General Motors pitch and Aircel.
What are the two biggest challenges faced by the group?
Certainly the macroeconomic environment is a challenge. But we have been through this before. The other is talent on a global basis. We have to make sure we are getting the right people.
IPG recently sold its stake in Facebook. Is the transaction complete?
Well, we sold half our stake. And we sold it at $133 million; yes, we closed that transaction. And we had a $131 million gain, which is pretty good. We took the proceeds and we increased our share buyback programme. We still have another half that we haven’t sold.
How much do you own in Facebook?
It’s a private company; we don’t give that out. But it’s not a strategic investment for us, which is why we sold half of it, and if the environment is correct, we’d be interested in selling it (the rest). There is no reason for us to keep it. The issue is: at what price?
Are you planning to close the gap with the top three networks?
I don’t have to be the biggest. I just want to be the best.
shuchi.b@livemint.com
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First Published: Thu, Nov 03 2011. 10 37 PM IST