We have become stronger, bigger and our price has gone up: Michael Roth
Treating each existing client as a new pitch is the way one should treat clients, believes a visibly exhausted but upbeat Michael Roth, Chairman and Chief Executive Officer of the Interpublic Group of companies, (at Cannes).
Roth does have reasons to be in high spirits with IPG’s first quarter earnings of a strong organic revenue increase of 6.7%, the IPG chief seems to be on track to meeting IPG’s growth objectives, and he says ‘we have become stronger, bigger and our price has gone up” when we revisit the subject of IPG’s acquisition .
“Pitches make a lot of noise, but much of our business comes from our existing clients. So, if we can just keep our existing clients and manage those relationships, we should be in pretty good shape,” explains Roth, who confesses to losing sleep if a client is unhappy till he has the issue resolved.
Q. Two years ago when we met for an interview and we were talking about acquisitions, you said, “If someone wants to buy us, they better put a nice number on the table”, what is your take on this now?
Our stock is much higher than it was two years ago, so the number needs to be much nicer, the likelihood of someone putting that number on the table becomes less likely, we don’t need a transaction, we don’t need capital, and the only reason we would sell the company is if someone puts a compelling offer above where we are, and where we think we could get to, given the risk associated with it. And if that were to happen, obviously we would entertain it. You heard my answer when our stock was lower two years ago, now we have become stronger, bigger and our price has gone up.
Q. What are you currently looking to acquire?
We have a budget of $200-250 million, so we are always open to acquiring anything. But in our strategic reviews, we look for digital, media, and markets that have a geographical need for acquisition.
India is one of these markets, with a rapidly growing environment. The acquisition also needs to be strategically fitting with our businesses. We currently have a host of companies in the pipeline that we are talking to, and generally, we like to buy a company that we have an experience with, either through our clients or by working with them, those are the transactions that have more likes for us in terms of attractiveness. We don’t see any big need for a huge transaction right now, so we are comfortable with the budget that we have set out.
Q. After last year’s Mediapalooza, how is this year in terms of media reviews? A lot of global leaders had predicted a lot more pitching as the new normal……
The world is changing dramatically, there are new innovations and there are new ways of convincing the consumers. A lot of pitches happened last year because it was time to have a review; these were clients who hadn’t had a review in 2-3 years.
Also, clients felt it would be a healthy thing to take a look and see if their business is being well served by the existing providers in terms of new and, creative thinking, bringing the best tools and efficiencies.
Transparency became an issue and it certainly was a part of the reviews, but I don’t think that’s what drove the reviews. What drove the reviews was either they had normal reviews or they wanted to see if they get the best in class responses.
I don’t see a lot more pitching as the new normal, nor do I see a repeat of what it was in 2015, which was just one pitch after other.
Q. What are your takeaways from the review process of last year? Are there any changes required in the way agencies work right now?
What I have told our people is that we should treat each of our existing clients as if we are pitching to them. That’s the way you keep clients. And frankly, we have been pretty much successful in keeping them. So, much of our business comes from our existing clients, these pitches make a lot of noise, but it’s the existing clients that are generating our business. So, if we can just keep our existing clients and manage those relationships, we should be in pretty good shape.