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News

Interpublic Acquires Russian Advertising Agencies in Long-Sought Deal

The advertising giant Interpublic Group of Companies is gaining a stronger foothold in Russia.

In a deal that has been brewing for years, Interpublic has acquired three Russian creative agencies from ADV, its longtime partner in the country.

Interpublic, which is based in New York, has done business in Russia for two decades through ADV, an advertising group that encompasses more than 40 agencies in countries including Russia, Ukraine and Azerbaijan. But with the deal, Interpublic will now directly own advertising agencies in one of the top global markets.

“We have wanted to own these agencies for years,” said Michael I. Roth, the chairman and chief executive of Interpublic. “We have a number of global clients that operate in Russia that are very important, and it’s important for us to have a relationship with our clients in the markets they compete in.”

Interpublic’s clients in Russia include L’Oréal and Unilever.

The other top holding companies — WPP, Omnicom Group and Publicis Groupe — also conduct business in Russia.

At the moment, relations between the United States and Russia are particularly fraught and the Russian economy is stumbling.

Last year, Martin Sorrell, the chief executive of WPP, one of the world’s biggest ad holding companies, warned that the economic sanctions imposed on Russia could threaten the advertising company’s profits there.

Interpublic’s media agency, Magna Global, expects industrywide ad spending to decrease 12 percent in Russia this year, largely because of economic strain in the country, according to an annual forecast released on Monday. (The company estimates that the Russian market will account for 40 percent of the $19.3 billion in ad sales in central and Eastern Europe.) Ad spending in Russia will stabilize in 2016, Media Global predicts.

Despite the geopolitical and economic strain, Mr. Roth said that owning agencies in Russia made sense. “Our clients are still there, and they still advertise and we need to do the work,” he said. “Frankly, if we weren’t there, our competitors would be doing the work.”

Ad holding companies have also been looking elsewhere for longer-term growth opportunities. Omnicom, for instance, announced in November that one of its divisions, DDB Worldwide, had acquired Grupo ABC, an advertising group in Brazil.

With the deal, Interpublic gains a majority stake in the Russian affiliates of three of its most well-known global creative agencies — McCann, Mullen Lowe and FCB. ADV shareholders will remain minority owners of the agencies. Financial terms were not disclosed, but a person familiar with the deal said it was valued at between $10 million and $20 million; Interpublic sets aside $150 million a year for acquisitions.

The deal will give Interpublic control over talent and management decisions at the agencies and allow the company to record revenue from its Russian operations on its own books.

ADV and the French advertising company Havas are also partners in Russia; that relationship will remain intact.