Advertising: The Ax at Interpublic

Six years ago, Marion Harper Jr. put together the Interpublic Group of Companies — a 24-firm complex of market-research, sales-promotion, advertising and public-relations outfits built around McCann-Erickson, the world’s second-largest ad agency after J. Walter Thompson. Complete service to clients — in principle, even to competing clients — could be rendered within the group’s enterprises, with platoons of talent shifted around to cater to specific needs. It was a grand plan, but it went sour. In recent weeks Interpublic has undergone a major overhaul. More than 500 of some 8,000 employees have been dismissed. Harper, at 51, has been eased up to the chairmanship, and active command has been taken over by silver-haired Robert Healy, 63, a former McCann-Erickson chairman who was recalled from semiretirement.

Trimming & Scrapping. Although it had billings of $700 million last year ($445 million by McCann-Erickson alone), Interpublic nevertheless got into a serious financial squeeze. Just how bad remains the secret of a handful of top executives who own the company. They are willing to concede that Interpublic will have a loss in 1967, due partly to the paring of budgets by some of the company’s 1,600-odd clients around the world. As the head of a new five-man executive committee closeted daily at the company’s Manhattan headquarters, Healy has an ax-wielding mandate. “We are trimming companies fundamentally not related to client service,” he says. “Eventually we will change the corporate structure, but just how we can’t tell.”

He has already trimmed down offices around the world, from Hong Kong to the Geneva headquarters of Interpublic’s international operations. Gone are such nonadvertising units as a publisher of business books and a company set up to develop new business for Interpublic. Fashion International, a design-consultant subsidiary with offices in Paris and New York, as well as McDonald Research Ltd. of Canada, went under. Chicago Group Inc., a special-projects unit, was absorbed by Mc-Cann-Erickson’s Chicago office, while one of Interpublic’s nine advertising agencies, Fletcher Richards, was merged with Marschalk & Co. Ancillary units like Starflite Inc., which operated three airplanes mostly for Interpublic executives, and a dude ranch on Long Island, where executive conferences used to be held, have been scrapped.

Difficult to Finance. More pruning and streamlining is to come, and more employees are likely to lose their jobs before the dust settles. In the end, Interpublic may bear only a slight resemblance to the company Marion Harper built and led. Says Carl Spielvogel, president of Interpublic’s Market Planning Corp. and a member of the board: “We have faced the fact that it is increasingly difficult to finance a worldwide business such as ours. We have talked about going public, but there have been no plans made and no documents signed.”