Can troubled IPG agencies prove separate worth?

Whichever way you cut it, it's been a tough few years for Interpublic Group's two media agencies in the UK.

Steve Barrett, editor of Media Week
Steve Barrett, editor of Media Week

Universal McCann and, particularly, Initiative have suffered major account losses, often prompted globally, that have had a drastic knock-on effect on their combined billings.

Initiative's hold on Unilever's UK and European business was finally taken away from it in 2004, and further major accounts followed, as what seemed like an unstoppable negative momentum built up around the agency. Universal McCann lost the global Nestle account in the same year, and the L'Oreal Golden pan-European work the year after.

It must be incredibly galling to lose a UK account due to a global review when the client over here may be perfectly happy with what you are doing as an agency - but that is the nature of modern global media accounts, unfortunately.

It is very difficult to turn things around in these circumstances and persistent rumours circulated that it was only a matter of time before parent company IPG merged them.

The network has now acted, but it has stopped short of actually combining the two businesses. Initiative will move into Universal McCann's offices and the two agencies will increasingly work together on digital projects, where the host is significantly stronger than its soon-to-arrive lodger.

Former Initiative chief executive Jerry Hill has moved to a global strategic role and is out of the UK picture. It is left to new Initiative chief exec Gary Birtles and Universal McCann's incumbent chief Andy Jones to make the new structure work, reporting to Graham Duff, president of IPG Media Brands.

Universal McCann has suffered less than Initiative, but still recently lost accounts such as Coca-Cola and the Telegraph. To compound matters, Jones was absent for much of last year following a serious road accident, from which he has now thankfully almost fully recovered.

No doubt rumours will continue, and it is inevitable that the agencies will work more closely together and benefit from shared costs savings, but Duff is adamant that a merger is not on the cards. There are many talented people at both agencies, but this must be their last chance to prove that they can co-exist as separate entities and prosper in the long run.

Steve Barrett is editor of Media Week

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