Businessmodel of Interpublic Group

Customer Segments

Interpublic Group provides a range of services to a large and diverse client base, comprising commercial entities across multiple business sectors. The Company’s largest client sectors, based on revenue, are:

• Automotive and Transportation, including automotive manufacturers, transportation companies, and fleet management companies;
• Healthcare, comprising healthcare providers, medical suppliers, pharmaceutical companies, and biopharmaceutical businesses; and
• Technology and Telecom, comprising technology and software companies, telecommunications operators, mobile network providers, and television network service providers. Interpublic Group also provides services to customers across the consumer goods, retail, and cosmetics industries. The Company has included among its customers a number of high-profile companies, such as Johnson and Johnson, General Motors, Unilever, Microsoft, and L’Oreal.

Interpublic Group operates agencies across more than 100 countries worldwide, spanning all of the world’s largest markets. The Company’s largest market remain the US, which accounts for almost 60% of the Company’s revenue. The Company also generates significant portion of its revenue from customers in the UK, Continental Europe, Asia Pacific and Latin America.

Value Propositions

Interpublic Group provides value to its customers in the following ways:

• Its expert and experienced industry personnel, with the Company employing expert personnel across its two operating segments, as well an experienced team of senior executives;
• Its global reach, with the Company operating across more than 100 countries worldwide, with customers spanning the Americas, Europe, and Asia Pacific;
• Its innovative media offerings, with the Company providing competitive and effective traditional media buying to major clients, as well as automated digital ad buying, and data and analytics;
• Its integrated marketing solutions, with the Company providing solutions that integrate talent from throughout the Company in order to fulfil the needs of its largest clients; and
• Its digital capabilities, with the Company investing in digital technology capabilities – including search, social, user experience, content creation, and data and analytics – in order to provide state-of-the-art solutions. ### Channels

Interpublic Group operates a website at www.interpublic.com, through which it provides information on its various services, solutions, and activities. The Company does not operate an online sales channel through its website; it does, however, provide a search facility that enables customers to find appropriate agencies for their individual needs. Interpublic Group’s numerous agencies also operate their own online channels and websites, through which the provide information on their operations.

Interpublic Group provides services to customers directly through teams of consultants. These industry professionals operate out of the Company’s international network of agencies, which spans more than 100 countries worldwide, including in large markets such as the US and the UK, as well smaller markets such as Senegal, Mozambique and Guatemala. Interpublic Group operates three global networks: McCann Worldgroup; Foote, Cone and Belding; and MullenLowe Group, which provide integrated, large-scale advertising and marketing solutions.

Customer Relationships

Interpublic Group does not operate a self-service sales channel. Customers, however, are able to search the Company’s website for appropriate agencies to fulfil their needs. The Company makes its sales to customers through its various international agencies, with its specialist personnel consulting directly with clients in order to provide bespoke solutions that fully cover the individual requirements of each client.

Interpublic Group assigns dedicated account management teams to its largest clients, providing ongoing support and regular communications. The Company seeks to establish longstanding recurring client relationships. Existing and prospective clients are able to contact Interpublic Group’s sales and support teams over the phone and via email, they are also able to find contact details for the Company’s numerous agencies through their respective websites.

Additionally, Interpublic Group is able to interact with its customers through its social media accounts – including with Twitter and Facebook -  as well as through the social media accounts of its numerous network agencies.

Key Activities

Interpublic Group is an advertising and marketing services company. It operates a network of subsidiary companies and agencies that are engaged in consumer advertising, digital marketing, communications planning and media buying, public relations and specialised communications services across the world.

Interpublic Group organises its activities into two segments: Integrated Agency Networks, which includes the operations of McCann Worldgroup, Foote, Cone and Belding, MullenLowe Group, IPG Mediabrands, digital specialist agencies and domestic integrated agencies; and Constituency Management Group, which includes the operations of Weber Shandwick, Cassidy, DeVries, Golin, FutureBrand, Jack Morton and Octagon Worldwide, and provides clients with various public relations, event production, sports and entertainment marketing, corporate and brand identity, and strategic marketing services.

Key Partners

Interpublic Group works alongside a number of partner companies and organisations in providing its services to customers. These partners can be categorised broadly as:

• Supplier and Vendor Partners, comprising suppliers of various tools, resources, services, and technologies that are utilised across the Company’s numerous agencies, as well as companies to which certain non-technical functions can be outsourced;
• Strategic and Alliance Partners, comprising a range of companies and organisations with which the Company shares resources and collaborates on joint projects; and
• Technology and Digital Partners, comprising a range of technology companies and fellow agencies that provide digital services, such as an analytics and search services, and technology systems that support and supplement the Company’s offerings. Interpublic has launched a number of partnerships win recent years. This includes a venture partnership with R/GA Ventures, under which the two companies will provide support to growth-stage and early-stage startups that are leveraging new technologies such as artificial intelligence and machine for various platforms including messaging, voice activation, and nascent software innovations.

Key Resources

Interpublic Group’s key resources are its brands and intellectual properties, its network of offices and agencies, its IT and communications infrastructure, its specialist personnel, its partnerships, and its sales and distribution channels.

Interpublic Group leases a network of offices from third parties across more than 100 countries. This includes properties across the Americas, Europe, and Asia Pacific.

Cost Structure

Interpublic Group incurs costs in relation to the management of its network of agencies, the maintenance of its IT and communications infrastructure, the management of its partnerships, the operation of its sales and distribution channels, and the retention of its personnel.

In 2015 Interpublic Group’s largest cost related to the payment of salaries and benefits to its international workforce of 49,200 employees, which totalled $4.86 billion for the year. The Company also accrued substantial office and general expenses – including rental costs, professional fees, and other expenses incurred in servicing its clients – which amounted to $1.89 billion.

Revenue Streams

Interpublic Group primarily generates revenue through the planning and execution of multi-channel advertising, marketing, and communications programs to an international client base. Revenues from the creation, planning and placement of advertising are primarily derived on a negotiated fee basis and, to a lesser extent, on a commission basis, with fees typically calculated to reflect hourly rates plus proportional overhead and a mark-up. Commissions are earned based on services provided and are derived primarily from a percentage or fee over the total cost to complete an assignment.

In 2015 Interpublic Group generated annual revenue of $7.61 billion, up marginally on the $7.54 billion recorded by the Company in 2014. The vast majority of the Company’s revenue was generated by its Integrated Agency Networks segment, which recorded annual revenue of $6.14 billion. The Company’s Constituency Management Group segment generated $1.47 billion in revenue.