WPP to merge Young & Rubicam with digital ad firm VML
Merger is part of new CEO Mark Read’s plan to simplify WPP’s structure
WPP PLC is merging its wellknown creative agency Young & Rubicam with its digital-ad firm VML, part of the advertising giant’s efforts to combat digital disruption across the industry.
The company said the combined business would be called VMLY&R, employ 7,000 people and be led by Jon Cook, who is currently VML’s global chief executive. David Sable, Y&R’s global CEO, will be nonexecutive chairman and transition to a new role within WPP. The combined business will have annual revenue of more than $1 billion, according to a person familiar with the matter.
The move is part of new WPP Chief Executive Mark Read’s plan to offer a simpler structure for clients who want more integration across marketing functions such as data, digital, creative advertising and media buying.
Mr. Read has also said he plans Merger between Young & Rubicam and VML will produce combined business called VMLY&R and will employ 7,000 people.
to revive sales growth at WPP’s creative firms like Y&R in part by making them work more closely with the company’s st able of digital-advertising and datascience firms.
Mr. Read has said he would unveil a full strategy update by the end of the year. “This is an important step as we build a new, simpler WPP,” Mr. Read said. “VML and Y&R have distinct and complementary strengths spanning
creative, technology and data services.”
The Wall Street Journal first reported that WPP was considering such a move on Sunday.
WPP acquired Young & Rubicam as part of a broader $4.7 billion deal in 2000 and the firm’s clients include blue-chip U.S. companies such as Office Depot Inc., as well as the U.S. Navy. The New York-based firm has been credited with creating some of TV’s most popular ads, including a recent remake of a 1977 spot for Xerox about a monk who finds a way to quickly make copies of a handwritten manuscript. VML was founded in 1992 and bought by WPP in 2001. The Kansas City, Missouri-based business has more than 3,000 employees at dozens of offices around the world. It has won lots of new business for WPP in the past few years and its recent work includes a virtual-reality experience for Gatorade that allowed players to throw passes while being coached by Peyton Manning.
VML is one of WPP’s bestperforming businesses with a compound annual growth rate of 22% between 2014 and 2017, according to analysts at Kepler Cheuvreux, a broker.
WPP’s marquee creative agencies—including Y&R, Ogilvy, J. Walter Thompson and Grey—are generally growing more slowly than WPP’s digital and media buying operations. WPP doesn’t break out the performance of its creative agencies but it blamed weakness in their North American operations for its lackluster financial performance in the last quarter.
The merger of Y&R and VML is aimed at reviving growth rather than cutting costs, according to the person familiar with the matter, although there will be some job losses among backoffice roles to avoid duplication.
Clients are increasingly demanding a wider suite of services from creative agencies beyond the traditional TV spot or print campaigns, such as marketing campaigns centered a round influential individuals, data analytics and content for socialmedia channels.
While ad-holding firms have been streamlining their complex structures, merging agencies can be challenging because they often pride themselves on having a distinct culture. Many of these agencies have been used to operating mostly independently, competing against each other to win accounts.