Tuesday, January 29, 2008

WPP building the next generation agency?

Currently attending a panel with Lance Maerov, the SVP Corporate Development (read M&A) for WPP and Trevor Kaufman, the CEO of Schematic, a company they bought last year as part of their string of nearly a hundred acquisitions and investments in 2007. They're talking about how traditional agencies are acquiring and investing to stay relevant in the years ahead. I have a short excerpt in the video below, but here is a summary of interesting points:

  • traditional agencies realized sometime last year that they were quickly becoming less relevant and being challenged by new players. Their response was pretty much that of any incumbent: buy what you can't match. The interesting question is how will they actually address the challenge of truly integrating the acquisitions and achieve a fundamental transformation of the DNA of the traditional agency business;

  • topic of building the next generation agency seems to be in the CEO's agenda at WPP, which is a good sign and pretty much what is also happening at Publicis;

  • choosing for acquisition targets they went first for companies they had been in touch with for a number of years;
  • big focus on BRIC countries and North America;

  • the traditional agencies are choosing companies for acquisition based on their size and business potential, looking for good management teams in place because they don't have the skills and resources to take over the management of these companies. In Maerov's words "if an entrepreneur thinks that WPP people will start running his business once the acquisition is done, that's a red flag for us and the deal will not happen";

  • areas of interest include behavioral targeting, analytics, interactive capabilities, integration between online and off-line spaces;

  • in the video below they mention 24/7 Real Media, another acquisition of WPP in 2007, which they said was interesting because it allowed them to optimize campaigns both online and off-line;

  • Maerov said despite the purported slow-down of the economy he sees no sign of budgets being reduced and that WPP will pursue an aggressive strategy of acquisitions, something that is confirmed in this article of the NY Post;

  • in the same article they mention a recent acquisition through JWT of 75% of Belgian Tagora, positioned as a dialogue marketing agency, with annual sales of 5.3 m$ (3.6 m€ with gross assets of 2.74 m€ end 2007). Could not find the acquisition price, but I would be interested in getting it...

Video sent by alexpapa


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