Internal memo explains why ad holding company IPG launched app-focused martech business Kinesso

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Chairman and CEO Michael Roth.

• Ad holding company IPG launched a new business called Kinesso.
• Kinesso's goal is to build apps and software products for clients to help them create, target, and measure ad campaigns with data.
• In an internal memo, IPG Chairman and CEO Michael Roth called the move an attempt to build on IPG's $2.3 billion acquisition of most of data giant Acxiom.
• One year after the acquisition, IPG credits the Acxiom with new business wins. But some industry observers remain skeptical, noting that the company does not own this first-party consumer data.
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Today IPG, the fourth-largest ad industry holding company, announced the creation of a standalone business called Kinesso, which the company claims will create software as a service products for clients.

In an internal memo acquired by Business Insider and printed in full below, IPG Chairman and CEO Michael Roth wrote that Kinesso will "build software products" and apps to help clients better target and measure their ad campaigns through the use of consumer data.

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The new business will consist of IPG's ad-tech division Cadreon, as well as its Data and Technology unit. It will primarily collaborate with IPG Mediabrands, the network that includes all of the holding company's media buying agencies.

Read more: Why IPG CEO Michael Roth thinks his holding company is better positioned than bigger rivals to withstand the assault on ad agencies

According to a press release that went live this morning before Roth's memo, Kinesso will also comply with privacy legislation. Arun Kumar, former Cadreon president who is IPG's chief data & marketing technology officer, will double as CEO of Kinesso.

The news is a significant attempt to build upon IPG's 2018 acquisition of Acxiom Marketing Solutions, the data-marketing division of Acxiom, for $2.3 billion, for its so-called first-party consumer data.

While IPG claims that the acquisition has led directly to new business wins, some observers remain skeptical. One agency executive emphasized that IPG does not own the data involved in Acxiom, which compiles information marketers draw directly from their own customers. Sir Martin Sorrell of S4 Capital recently claimed that IPG plans to "cut off access to the Acxiom data to competitors" to get an advantage in the market. The company later called that statement inaccurate.

Forrester chief analyst Jay Pattisal called the launch of Kinesso a "creative leap" and said it could improve IPG's software and tech capabilities.

An IPG spokesperson referred Business Insider to the press release.

Here's the full memo:

With the acquisition of Acxiom, we signaled our intent to lean into data-driven marketing, as well as position ourselves as our brands' trusted partner in their first-party data management. Today, we are excited to share some news with you that speaks to the next stage in our vision for IPG.

We are announcing a new marketing technology company called Kinesso, which brings together top data and technology talent with addressable media experts, and leverages Acxiom's assets and capabilities.

As you'll read in our press release announcing Kinesso, the company will build software products to help our agencies deliver precision marketing for their clients.

Combined with the capabilities of media companies, along with our creative and marketing services agencies, Kinesso will enable our clients to drive better outcomes through marketing that is faster, more efficient, and informed by a conscious commitment to data ethics.

While it is a stand-alone company, Kinesso will be interdependent with Mediabrands and its agencies. In the media space, we've been focused on creating better outcomes for some time, which has been a key differentiator for both Initiative and UM, helping drive their success. Kinesso is the next step - by investing in tools and products fueled by data, we will be able to deliver advanced audience insights that help build and transform clients' businesses.

This is an incredibly exciting time for IPG in realizing our vision in the power of data-driven marketing. We look forward to seeing Kinesso's impact for our clients and in the marketplace.

For more details on Kinesso please visit their new website.

I appreciate all your support!

Michael Roth

Chairman & Chief Executive Officer, IPG