IPG Reorganizes Zentropy into McCann-Erickson

It’s been a tough week for i-shops.

The Interpublic Group Thursday continued a trend of reorganization in the
online design and marketing space with the announcement that it will roll
its online marketing agency Zentropy Partners into its McCann-Erickson unit.

The news follows on the heels of Tuesday’s announcement by Dallas-based
Luminant that the e-services firm would reorganize and cut 40 jobs in an
effort to achieve profitability. Last week, Silicon Alley’s Razorfish
warned of lower-than-expected profits because of a slowdown in European
revenues, and this week it said it would cut 20 percent of its workforce.

The move comes as players in the Web integration, online design and
Internet marketing business are seeing flagging revenues and drooping stock
prices, amid concerns about dot-com spending and the slow pace of
decisionmaking by offline businesses. Viant, iXL, and Organic have also been
plagued by problems in recent months.

McCann said Zentropy will be integrated into its MRM Worldwide network of
CRM shops to enhance MRM’s online capabilities. Spokespeople said Zentropy
will benefit from exposure to MRM’s global clientele.

McCann executives put a good face on the restructuring.

“We see a real opportunity now to strengthen, expand and realign Zentropy
Partners based on what clients globally are telling us about how they see
the Internet fitting into their overall business-building and communications
strategies,” said McCann chairman and chief executive officer James Heekin.
“With the Internet now absorbed into the overall economy, we want to be
ahead of the learning curve in developing the future of the digital
marketing business and to do so on a profitable basis.”

IPG launched Zentropy in December 1999 as an independent unit. The
company became something of a preferred provider of McCann’s, as the ad
agency often tapped it for online work.

Michael Tey, Zentropy’s former chief engagement officer, will assume the
head post at Zentropy as president. He succeeds founder and former CEO John
Connors, who the company said will be transitioned to IPG’s Internet
Ventures Group.

The new MRM “will be applying the industry’s newly embraced profitable
growth model to quickly move ahead in developing the next generation of
practice in what’s being called customerization,” said Mark Dowley,
president of McCann’s marketing communications group, who will oversee MRM.

“They have an advantage going into this together that no other
interactive agency or consultant has on its own. Both [Zentropy and MRM]
already share a number of blue-chip clients, including Coca-Cola, General
Motors, L’Oreal and Microsoft. And together they comprise a talented group
of almost 2,000 employees in all regions of the world, with the marketplace
power of $1.5 billion in billings.”