WPP’s decision to merge J Walter Thompson with Wunderman, bringing to an end an agency name that has endured for 154 years, is a sensible move for the holding company, analysts have said, but more substantial changes could be ahead.
Michael Kassan, chairman and chief executive of MediaLink, said he saw the move as a "bold and aggressive step toward creating an agency proposition that is simpler and easier to buy."
The pairing of the two businesses brought technology and data together with creative storytelling, Kassan said, adding, "The theory behind it is a sound one, and I’m eager to see how, and how quickly, the output reflects the strategy."
Despite the move being painted as a merger, Wunderman was undoubtedly the brand "acquiring" JWT and not the other way around, said Alex DeGroote, founder of DeGroote Consulting, pointing out that Wunderman’s goodwill value (its intangible assets) were valued by WPP at $1.9 billion, behind only Group M and Kantar within the group.
"Be clear, alpha is eating beta," DeGroote said. "Growth and digital is winning over tradition and creative. Modernity is crushing history."
Although Mel Edwards, global chief executive of Wunderman, who will now have the same role in the merged agency, denied that it was a "a cost-cutting exercise," DeGroote said there would inevitably be job losses.
"What this does to the WPP culture remains to be seen, but it must be disconcerting for many senior group execs, particularly in North America, the regional locus of the group revenue underperformance in recent times," he noted.
DeGroote also pointed out that WPP’s share price had yet to significantly rebound after a slump at the end of October.
"Under the bold leadership of CEO Mark Read, WPP was always going to be a 2019 story," he said. "But 2019 is now truly shaping up to be the 'make or break' year."
The merger could be compared with Omnicom’s decision to combine media agencies Hearts & Science and Rocket, according to Julie Langley, partner at Results International, who noted, "It's very deliberately putting data to the fore in a fundamental part of the network's offering."
"WPP is bringing together data and creative rather than data and media, though," she said. "Wunderman's heritage and DNA is in data-driven personalization and in using data to optimize the customer journey."
The move was a logical response to client demand, Martin Vinter, head of U.K. media at Ebiquity, suggested. "Having to use up to three to five agencies results in inherent complexity that clients do not want, need, or pay for," he said.
"CMOs have been clear with agencies that they want simplicity and access to agency talent and capability," Vinter added. "Deploying tens of different capabilities smoothly requires a different model and often one that manifests itself in the form of one agency entity bring together core capabilities."
This story first appeared on campaignlive.co.uk.
