NEW YORK, July 11—As first reported at this website one month ago, The Interpublic Group of Companies, having recently completed its acquisition of True North, has merged its already giant Weber Shandwick Worldwide unit with TN’s BSMG Worldwide to create a massive public relations entity with more than $500 million in revenue.


The combined firm will operate under the Weber Shandwick Worldwide brand and will be led by BSMG chairman Jack Leslie and BSMG president Harris Diamond, who will hold the same titles in the new firm. Larry Weber, founder of The Weber Group and architect of this deal, will be responsible for IPG’s new Advanced Marketing Services Group.


According to an IPG press release, the new firm “combines the visionary thinking and global reach of Weber Shandwick with the entrepreneurial spirit of BSMG to create a new type of public relations firm that will take the lead in transforming the PR industry.”


It will also end Fleishman-Hillard’s brief tenure as the world’s largest public relations firm. Fleishman ended the year 2000 with worldwide revenues of close to $343 million, beating out Weber Shandwick, which recorded $335 million after an earlier IPG restructuring which put The Weber Group together with most of the operations of the old Shandwick International. With BSMG’s $192 million in revenues, the new Weber Shandwick will be by far the largest PR brand in the world.


Says Diamond, “I think the great advantage of size in the kind of intellectual capital you can attract and gather in one place. At a certain size before you can invest in people in ways that smaller firms can’t, in terms of training and professional development and career options. Our size will enable us to attract and keep tremendously talented people.”


“Is there still a role for small specialist firms? Absolutely,” says Weber. “But this is the right thing for this firm. I think there’s going to be continued consolidation of clients who are looking for one firm to handle their business worldwide, who are going to spend $10 million or $15 million worldwide, and we are going to be in a terrific position to help those clients.”


Weber Shandwick brings considerable expertise in technology (through The Weber Group and Miller Shandwick), entertainment (though Rogers & Cowan) and public affairs (through Powell Tate) while BSMG has strength in investor relations (through The Financial Relations Board), public affairs and marketing public relations.


Geographically, BSMG has a solid offering in Chicago, the only major market where Weber Shandwick was not a player, while Weber Shandwick has a formidable network of offices in Europe and the Asia Pacific, delivering to BSMG a global capability it had lacked.


“For me this was a marriage made in heaven,” says Weber. “If you look at what Weber Shandwick needed, we needed critical mass in New York and a presence in Chicago. We needed investor relations. We needed to strengthen our position in healthcare. And we needed a CEO of stature. With this deal, we got everything we wanted.”


Diamond acknowledges that the firm still needs to build its healthcare capabilities, particularly in Europe, but after that, he says, the only weaknesses are a lack of geographic coverage in Latin America and Africa and Eastern Europe.


What remains to be seen is how senior positions—office general managers and practice leaders—will be allocated, since there is some potential for conflict in markets where both firms have an established presence. But Diamond says he believes in a firm the size of the new Weber Shandwick there will be plenty of interesting challenges to keep everyone satisfied.


There will, however, be cultural issues to address.


“I think the first challenge is to create a culture of excellence,” says Weber. “Shandwick has been through so much transition over the past few years, there’s a need for clear, consistent leadership to get the agency focused on client service and excellence. Then the challenge will for Harris and I to work together to help shape the PR industry and to look at what comes next. We’re going to be measured by things like the depth of our research capabilities, the depth of our CEO counseling, and our capabilities in areas such as issues advertising.”


IPG has also announced new plans for Golin/Harris International, which will become part of a new global marketing company called The Partnership—one of three giant marketing services groups created in a major restructuring of the holding company’s advertising and other operations.


“We have been working with a number of these firms for several months,” says Ellen Ryan Mardiks, worldwide director of brand strategy at Golin/Harris. “But this increases the opportunities for us. It gives us just a little more formal basis to work with some of these other firms and to bring synergies to clients. At the same time, we remain who we were.”


IPG will be divided into the three marketing services groups—The Partnership, McCann-Erickson Worldgroup, and FCB Group—each of which will include a broad range of marketing services. Weber Shandwick will provide the PR component for the McCann and FCB group, although both it and Golin/Harris will continue to report to a fourth group, the Advanced Marketing Services group, a successor to the former Allied Communications Group.


IPG chairman and CEO John Dooner explained the new structure by pointing to changing client demands. “Five years ago our clients looked to us to provide marketing solutions that were driven primarily by advertising,” he says. “Now, while advertising is still the major cornerstone in the global brand communications mix, clients also want us to offer more types of marketing services and communications expertise of the highest quality and on a worldwide basis. Each of our three marketing communications groups will now be able to offer their clients a full range of marketing services delivered on a collaborative and integrated basis.”


The Partnership will include Lowe Lintas & Partners, Draft Worldwide, Initiative Media, Bozell New York, Carmichael Lynch, Deutsch, and Tierney Communications. Both Carmichael Lynch and Tierney have strong public relations operations, which will continue to operate independent of Golin and Weber Shandwick, although Mardiks says she sees opportunities to work closely with those operations, as Golin has done in the past.


McCann Erickson Worldgroup, meanwhile, will include McCann Erickson Worldwide, MRM Partners, FutureBrand, Torre Lazur Healthcare, Temerlin McClain, Hill Holliday, and Bozell Chicago. The FCB Group will include Foote Cone & Belding, Marketing Drive, Luxon Carra, The Hacker Group and FCB Health Care.


Says Dooner, “Other major benefits of our new organization include increased organic growth opportunities and measurable improvements in operating productivity. By opening the doors to more collaboration we expect to provide each individual component company with more new client opportunities from sister companies, as well as new system clients. By consolidating into four powerful operating groups we also expect to achieve real improvements in productivity.”