IPG suspends operations in Russia

Interpublic Group of Companies (IPG) is the latest agency holding company to cease business operations in Russia in response to its unprovoked war in Ukraine.  

In a memo to staff on Monday, obtained by Campaign US, IPG CEO Philippe Krakowsky explained the rationale behind pulling out of the region, citing failed ceasefire talks and escalating attacks on civilian targets, such as hospitals. 

IPG hoped at first to maintain support for its nearly 200 long-term employees in Russia but Krakowsky said that “the trajectory of the conflict is escalating, and the war could well go on for some time.”

The holding company will leave its three majority-owned Russian creative networks with enough cash on their balance sheets to pay employees for the next six months at minimum. The holding company will also work with local teams to transition clients in the region. 

“Sadly, there are no answers to this crisis that are either easy or absolute – every organization will need to determine the unique path that’s best for them,” Krakowsky wrote. “The reality is that we are in the early stages of a historic moment which we will all be processing and coming to grips with for years to come.”

IPG’s decision to pull out of Russia follows that of WPP, which suspended operations in the country on March 4 in an effort to stand with Ukraine. WPP has 1,400 staffers in Russia. 

Agency holding companies have joined the chorus of brands that have ceased operations in Russia, including McDonald’s, Starbucks and Unilever that have paused or significantly scaled back their business in the region.

Read Krakowsky’s full memo below. 

To Global IPG Employees, March 14, 2022:

Wanted to provide all of you with an update concerning our activity and operations in Ukraine and Russia.

As you read in my note immediately after the unprovoked invasion of Ukraine, our focus has been on doing what we can to help our associates there. Even though our Ukrainian agencies are all affiliates, we feel a sense of responsibility to do whatever possible on behalf of people whose lives are being upended and threatened.

In that regard, some of the stories that have emerged these past two weeks are truly remarkable. We’ve seen IPG people in nearby countries drive to the border to physically assist and provide transportation to individuals and families as they leave Ukraine. Some among us have offered to help refugees get settled as they arrive in a new country, and still others are hosting displaced Ukrainians in their homes. Several of our agencies in Eastern Europe have made the amazing gesture of opening their doors to anyone fleeing the crisis, so that they have a place to work. Our teams are also working on the logistics required for refugees to access housing and medical services. Across IPG, our company has already donated hundreds of thousands of dollars to humanitarian organizations focused on addressing the crisis. Some of our agencies are providing direct monetary support to our affiliates in Ukraine, as well as assistance with IT and other operational needs. For the month of March, IPG is also matching individual gifts from IPG employees to organizations providing assistance to Ukrainians impacted by the war. 

A second part of the work we have been doing is the diligence required to determine a course of action relating to our operations in Russia, where we’ve been looking in-depth at a range of options and their implications. However, far more than a business decision, this has been a difficult moral dilemma for me and our senior management team. 

As you know, we are first and foremost a company that always strives to live up to our values. We believe in speaking up against oppression, whether that has to do with issues of race, or on behalf of other marginalized communities, and speaking up on behalf of democratic principles. We’re committed to initiatives that support sustainability. And we have always been clear that we value and stand by our people and their well-being. That’s core to our culture, since the nature of our business requires that we have the industry’s best talent – and that we each act as part of an interconnected global network, showing up for each other and working together for the common good.

The issue we’ve therefore been wrestling with is how to reconcile the fact that discontinuing our operations in Russia could mean abandoning our approximately 200 colleagues there, many of whom we’ve been fortunate enough to work with for decades.

As indicated in my initial note when the invasion began, we immediately applied all international sanctions and informed clients in Russia who are prohibited parties that we would no longer continue working with them. Because we have never owned a media business in Russia, we did not have significant concerns that our media buying was either fueling the local economy, or funding media being used by the state. 

Essentially, we hoped that by supporting our colleagues in Russia we could live up to the part of our DNA that values and seeks to protect our people across IPG, yet also live up to the international sanctions against the Russian regime. Had initial ceasefire talks been productive, we could have perhaps managed to do both. But recent and escalating attacks on civilian targets, including hospitals, make it regrettably clear that the trajectory of the conflict is escalating, and the war could well go on for some time.

Therefore, we have decided to suspend our operations in Russia. 

By having taken the time these past two weeks to plan for this eventuality, we will be able to leave our Russian teams with enough capital on their balance sheet to pay their people for a minimum of six months. We will also be engaging with them in the coming weeks, as we cede control of all aspects of management and operations to the local leadership team, in order to ensure continuity for any non-Russian clients who remain active in the market.

What we are witnessing in Ukraine is a tragic situation with profound consequences for our collective future. It will re-shape the international order globally, with lasting consequences for Europe, and have a ripple effect on political alignments all the way to Asia. It will also likely reverberate in countries across the globe where political or public figures have in recent years allied themselves with the Russian regime. 

Once the war began, some individuals and companies were quick to suggest they had all the answers. Sadly, there are no answers to this crisis that are either easy or absolute – every organization will need to determine the unique path that’s best for them. The reality is that we are in the early stages of a historic moment which we will all be processing and coming to grips with for years to come. 

That’s why I wanted to take the time to share with you in such depth the thinking that has gone into our decision-making. And more importantly, to let you know about the amazing things our people have been able to accomplish, on the ground, to help their Ukrainian colleagues and the Ukrainian people. The kind of work individuals across IPG, and organizations within IPG, have been doing these past two weeks is something we should all be proud of.

Keep well, and pray for peace,

Philippe