Advertising giant WPP announces merger of five leading brand agencies
In a surprising move, five of the most renowned branding agencies have announced they plan to combine to create one cohesive global brand agency following a restructure at parent company WPP. Set to launch in January 2018, the merger will see Brand Union, the Partners, Lambie-Nairn, Addison Group and VBAT come together to form one, as yet unnamed, behemoth. The new agency’s expertise spans the full breadth of the design and brand sector.
The five agencies, all of which are owned by British multinational advertising and public relations firm WPP, differ vastly according to their strengths and customer offerings. However, the merger plans to play on the expertise of design consultancy Brand Union’s global influence, the Partners’ creative excellence, the graphic prowess of Lambie Nairn, Addison Group’s corporate-oriented clientele and Amsterdam-based VBAT’s premium product offering. Of the five, VBAT has announced it is the sole subsidiary that will continue to operate under its current brand name.
Jim Prior, current global CEO of the Partners and Lambie-Nairn, and future global CEO of the new agency, says, "Our clients and our industry are ready for change and by bringing these agencies together, we can serve clients across the full range of sectors, capabilities and geographies. This convergence builds the next generation brand agency and is motivated by the opportunities for growth—for our clients and for us."
Simon Bolton, current CEO of Brand Union and future executive chairman of the new agency, says, "Bringing our agencies together will instantly give our clients the benefit of scale and single point of access to a breadth of services that covers almost every aspect of brand and communications."
WPP, founded in 1971 as Wire and Plastic Products, has had chief executive Martin Sorrell at the helm since 1987. In 2002, it was described by the New York Times as having entered the ‘Big Four’ of global advertising companies alongside Publicis, Interpublic Group of Companies and Omnicom. However, recent speculation points to a downturn of fortune for the FTSE- and NASDAQ-listed company, which has been under pressure to streamline its business amid reports of falling fortunes.
Manfred Abraham, founder of London-based business management consultancy Brandcap, comments on the news. He says, "Last week the news broke that Lord Sorrell (sic) was coming under increasing pressure to streamline WPP in response to slowing revenue growth. A source at WPP was quoted as saying that merging the figure-head creative agencies would destroy shareholder value. Coincidentally a week later it is the branding agencies, with the exception of Landor, and its clients that have taken the fall.”
Notably, other WPP-owned leading branding agencies such as Landor, Fitch, Design Bridge and Coley Porter Bell have not been included in the merger announcement. Abraham says, “Creating this new mega branding agency is reportedly a strategic decision for the benefit of the clients, not a cost saving exercise. Yet with big change comes big disruption and many clients could end up looking elsewhere before they ever receive these benefits.”
However, when speaking to Transform magazine, Jim Prior explained the reasoning behind the merger. Prior says, "It’s very public and common knowledge that a lot of large organisations in the world are asking questions about whether they can rationalise the way they operate in the sector. Many are reducing their spend, there’s a lot of pressure from shareholders in other client organisations to rationalise in those areas, and we hear that. And we understand why those questions are being asked, and we think that we’re offering those clients a better way to do business that meets their own obligations to their shareholders or stakeholders, and that is about delivering better services at great scale with more efficiency.”
Prior continues, “So that’s why we’re doing it – we’re responding to the needs of the client and aligning to the needs of the market. It’s about being on the front foot, it’s about generating a next-generation business model in the branding space that enables clients to get the services they want and need to a greater and more complete extent, and with a simpler interaction, simpler journey and simpler relationship. We’re very, very clear about that and we’re very confident that that’s what we’re pulling together. This is not a reactive move.”