In her new role, Watkins will work closely with the chief executive, Alex Altman, to ensure that the media agency is providing key clients such as Tesco with a full range of services across all media.
Initiative has not had a managing director since Danny Donovan left to join MediaCom in May 2010.
Watkins, who joined Grand Union in 2005, was promoted from managing director of its branded content and social media unit, Hubbub, to chief executive of Grand Union Group in 2008.
After Fullsix Group bought Grand Union in 2010, Watkins became the managing director of Grand Union Group.
Before joining Hubbub, Watkins was the content director at TBWA between 2003 and 2005. And before that, she was the director of international sales and sponsorship at the Spanish media group Prisa. She started her career at M&C Saatchi in 1996.
Altman said: "Anna’s appointment is a sign of our ambitions as a business and our commitment to clients. It’s great to have someone who is digital through and through helping to influence the direction of the agency. It indicates a positive change for Initiative and, indeed, for the future of the industry."