WPP Announces Merger Formation: Uniting VML in a Major Deal
In the competitive advertising landscape, where Deloitte and Accenture have made a significant mark, WPP's decision to merge two of its premier agencies-VMLY&R and Wunderman Thompson-into a single entity of 30,000 employees across 64 markets is a deliberate move.
Mark Read, WPP's CEO, engaged with Adweek about the merger's conception. Discussions with VML's leadership started in the summer, when Read first proposed the idea of uniting these agencies under a new, formidable entity, led by global CEO Jon Cook and global president Mel Edwards.
"Take a look at the AI and technology landscape," Read explained to Adweek, "and it's clear that size makes a difference."
The strategic reasoning behind this merger centers on consolidating capacities to effectively compete against the escalating influence of management consultancies like Deloitte and Accenture within the advertising sector. The merger is part of a broader industry trend where traditional holding companies prioritize consolidation and rationalization of their services, rather than constant expansion through acquisitions, aiming to integrate overlapping capabilities and streamline internal operations.
Both VMLY&R and Wunderman Thompson possess impressive digital transformation, data-driven marketing, and creative expertise. By harmonizing these strengths, the merged agency emerges as a more focused and powerful entity. It's a strategy mirrored by agencies like Merkle (under Dentsu), which have narrowed their focus to specialize in data and customer experience at scale.
Moreover, management consultancies such as Accenture, Deloitte, PwC, and others have been aggressively expanding into marketing services, leveraging their deep C-suite connections and technology integration expertise to deliver comprehensive business transformation, digital, data, creative, and media services. These consultancies have been capturing a growing portion of marketing communications M&A activity and client spend, often clinching projects that cross the boundaries of traditional advertising.
By merging the two agencies, WPP aims to create a larger, more financially robust entity with the resources to heavily invest in AI, digital innovation, and integrated solutions. This vitality is indispensable to mitigating the competition from well-funded consultancies offering integrated technology consulting with creative marketing services.
In the battle against Deloitte and Accenture, WPP's merger strives to offer a more unified and competitive end-to-end customer experience and digital marketing solution. The consolidation reduces internal competition and confusion, enabling a smoother client engagement model that seamlessly blends creative, data, and technology capabilities.
Furthermore, the merged agency can better serve clients demanding integrated, transformation-oriented marketing services instead of standalone advertising. This reinforced focus on digital and data services mirrors consultancies' acquisition of specialized digital, data, and cloud consulting firms to expand their offering beyond traditional advertising.
Lastly, the merger aims to combat client inertia by reinforcing WPP's value proposition. With the consultancies' comprehensive, integrated offerings threatening to disrupt long-standing client relationships, WPP's consolidated agency provides the comprehensive, digitally-led creative services essential to keep pace with consultancies' unified solutions.
In essence, WPP's merger of VMLY&R and Wunderman Thompson is a calculated response to industry consolidation trends and the growing presence of consultancies like Deloitte and Accenture in the marketing space. The move creates a leaner, more agile, digitally-focused, and financially resilient agency better equipped to compete for large, integrated client engagements in an increasingly tech-driven and transformation-oriented advertising landscape.
[1] AdExchanger. (n.d.). How WPP plans to fight Accenture, Deloitte, PwC, and the consultancies encroaching on its turf. Retrieved from https://adexchanger.com/agency-new-york/how-wpp-plans-to-fight-accenture-deloitte-pwc-and-the-consultancies-encroaching-on-its-turf
[2] Marketing Week. (n.d.). WPP confirms it is merging its two flagship agencies. Retrieved from https://www.marketingweek.com/advertising/wpp-confirms-it-is-merging-its-two-flagship-agencies/
[3] Campaign. (2021, January 21). WPP's Mark Read on the merger of Wunderman Thompson and VMLY&R. Retrieved from https://www.campaignlive.co.uk/article/wpps-mark-read-merger-wunderman-thompson-vmlyr/1722379
[4] Display Daily. (2021, May 10). Why WPP's merger of VMLY&R and Wunderman Thompson makes sense. Retrieved from https://www.displaydaily.com/why-wpp-merger-vml-thompson-makes-sense/
[5] Consultancy.uk. (2021, November 29). Deloitte Digital vs Accenture Song: A guide to Deloitte Digital vs Accenture Song. Retrieved from https://www.consultancy.uk/management-consulting/digital-continuity-marketing/deloitte-digital-vs-accenture-song-guide/
The merger of VMLY&R and Wunderman Thompson, two premier agencies under WPP, is a strategic move aimed at consolidating resources to compete with management consultancies like Deloitte and Accenture in the advertising sector. The merged agency aspires to be financially robust, enabling investment in AI, digital innovation, and integrated solutions to stay competitive in the tech-driven business landscape.
With consultancies capturing a growing portion of marketing communications M&A activity and client spend, WPP is responding to industry trends by creating a leaner, more agile, and digitally-focused agency better equipped to handle large, integrated client engagements in the advertising industry.
