Fireside Chat – Highlights:

Madison Alley Fireside Chat featuring Philippe Krakowsky, COO (CEO 2021), Interpublic Group (IPG)

September 16th 2020 1pm EDT

EXECUTIVE SUMMARY

Introduction

Madison Alley Global Ventures virtually hosted an exclusive one-on-one Fireside Chat featuring Philippe Krakowsky, COO (Now CEO) Interpublic Group & Chairman, IPG Mediabrands.

Overview of Interpublic (IPG)

Led by Chairman and CEO Michael Roth since January 2005, Interpublic Group (IPG) is one of the world’s premier global advertising and marketing services companies. Through their 52,000 employees in all major world markets, their companies specialize in consumer advertising, digital marketing, communications planning, media, public relations and specialized communications disciplines.

IPG’s companies cover the creative, health, communication, and media networks as well as the digital transformation, marketing services, U.S. agencies and data & solutions and addressable media and activation. Their companies create customized marketing programs for clients that range in scale from large global marketers to regional and local clients.

IPG’s companies’ extensive global services are imperative to serve their multinational and local clients in markets throughout the world as they look to scale brands, augment sales of their products and services and obtain market share.

The portfolio of companies evolved to include the digital in consumer’s purchase behavior to integrate the digital experience so that those core marketing services could grow and become competitive in the digital services economy, Philippe Krakowsky COO and (future CEO) states: “It is worth noting that as technology began to disrupt media usage and consumer habits whether it was initially to my mind the way that they consumed media but then over time; clearly it began to be the way that consumers interact with each other…a broad range of information including news and then obviously their purchase behavior..”

IPG began to lean more heavily into specialist and technical competencies to incubate and build enhanced sophisticated digital capabilities. One of the agencies is a digital marketing and innovation company which IPG purchased. The 80-person operation was brought on board to focus on the user experience – similar to a digital design studio. This team now has more than 2000 employees.

IPG is active in ideation, a well-known space that uses data and the synthesis of the data to produce the best-in-class data skills, privacy, and data ethics. IPG is also active in audience identification and audience activation. IPG continues to seek to automate and enhance a substantial amount of these processes, therefore, as Philippe Krakowsky states: “IPG is a company that is in flux and in transition”.

Company Snapshot

Founded in 1961, IPO 1971

$7.2B in Market Capitalization

52,000 Employees

Engage with 4,000+ Clients

Operating over 90+ Entities

Global Footprint – 100+ Countries

$8.6B Net Revenue

Partner with the world’s biggest brands such as: Disney, Coca-Cola, UPS,

& Microsoft, among others in the Fortune 500 Index.

Data as a Competitive Advantage

The acquisition of Axiom was instrumental for IPG, this was integral for the growth of the company as “tech adds value and takes friction away”. According to Philippe, from IPG’s vantage point they made a conscious effort to be distinct from their peers and not silo these digital companies. IPG clearly saw the need for this and built the programmatic platform to identify the search acquisition but, in many cases, they could take their existing skill sets or existing capabilities to migrate forward.

Data is central to the majority of everything that is occurring in the new economy according to Philippe – he also adds: “So whether it’s that it’s going to unlock innovation, or whether it’s going to give you the opportunity to really build customer experience and lifetime customer value – so that you can personalize experiences through data to enable much more”, for example, seamless, rather easy commerce through data is addressable as devices proliferated the market – what you have is a computer in your hand, therefore you essentially have ubiquitous computing – you have a tremendous amount of information being generated with signals and opportunities.

The Future of Media Buying

On the Future of Media Buying, a pointed question was raised by Michael Siedler (MA): “Where would you say we are in terms of evolution towards connected TV, and towards capturing data and attributing data across all channels – which is at least at this moment, is perhaps the holy grail of where media buying and programmatic media buying is evolving to?” Philippe’s response: “Our launch of this new offering in the last couple of months; when we brought this to market and we obviously feel it’s robust enough – that we think clients will look at what it allows them to do”

Philippe highlights further that there is a “huge proliferation of ways to reach and engage with consumers so it was super complicated and it was pretty opaque and where and how on the loom escape or in any of the drawings of how this works all of the ways in which as the Marketer…you ask yourself who am I paying a tax to and what does all of that opacity do for me?” “There is a lot of appetite – if you can demonstrate to me that your audience definition, and targeting is sophisticated and powerful enough and the way you are then able to track those signals.”

Global Competitive Landscape

It has been observed that consultants have ventured into marketing services: concurrently, there is tremendous opportunity for IPG and other marketing services groups to take further steps into technology services and even into the data services as IPG has done, if not, even to the strategic services as well, a question raised was “What is IPG’s perspective on the competitive landscape and how well positioned is IPG to take advantage of that? According to Philippe, IPG developed patents on methodologies with their own proprietary data – to be able to analyze the look-alike audiences; where there’s much higher fidelity.

Further, it was discussed that there is clearly a blurring of lines, luminaries in the industry understand the need to analyze how to incorporate tech into the solution. Data is allowing the industry to talk to clients about their overall data strategy and to stimulate conversations regarding optimizing certain elements that are inside their overall portfolio, these conversations are a direct result of analyzing the data that are business related and that are marketing adjacent. Convergence of tech and marketing being connected creates a bigger addressable universe for IPG.

Leadership in Crisis

On the topic of leadership in a crisis, Philippe has extraordinary perspective and experience in leadership,

he was formerly the Chief Talent Officer, and IPG operates on a global level with 50,000 employees. Philippe manages employees across the various countries, the operative term in this case is crisis. In a crisis, according to Philippe, you have to communicate more than in any other environment since employees are looking for answers. It is imperative to communicate and have a steady normal cadence to keep employees engaged, specifically across the various operating entities throughout the organizations worldwide. There is not a specific rulebook that can cover the distinctive factors across these entities: therefore, as a leader in a crisis you have to manage with fluidity. Communication is key to effectively lead across these operating entities.

Diversity and Inclusion

IPG was ahead of the curve: early on they brought in a full-time Chief Diversity Officer (CDO) into the holding company and funded a sizable budget – and did so even as IPG was in the vulnerable turnaround stage of the company

IPG has also tied the compensation of their CEOs to diversity objectives, qualitative and quantitative, that is consistent across the board to obtain an understanding of where the business is in its journey and work with the CEOs to set targets. IPG has seen immense progress around gender and LGBTQ+ inclusion.

“Thinking about greater accountability and coordinating compensation as a reward consequence piece to delve deeper into IPG to bring forth awareness and they have to take personal ownership of that”.

Summary & Q&A

“Outlook for 2020, how do you see the environment evolving through the end of the year and perhaps into early 2021?”

Krakowsky: “The impact has been quite disparate, IPG has competitors whose businesses are down on an organic basis, north of 20% YTD, and IPG’s business is down, just under 10 percent, which is perceived to be strong on a relative basis”

Stronger performance than peers in a challenging environment has been advantageous for IPG and they have clients that are a proxy for the broader market, IPG feels fortunate since at the outset healthcare is strong for the company and has held up well.

Axiom has multi-year contracts with clients (digital competences and data) that has held up well but there are other parts of IPGs business whether it’s experiential and event marketing, which by its nature is not going to perform as well

IPG is geographically broad and there will be disparate impacts and disparate recoveries.