All You Need to Know about the Consolidation of the Advertising Industry
Last year, WPP merged sister agency MEC with Maxus to form Wavemaker; In September this year, WPP announced the consolidation of agency brand Y&R and digital marketing firm VML to create a new entity called VMLY&R. “The complementary strengths of these two brands will span creative, technology and data services,” said WPP chief Mark Read. As people speculated about additional mergers, WPP leadership confirmed the consolidation of J. Walter Thompson, the world’s oldest ad agency, with digital network Wunderman late last month.
The new organization will be called Wunderman Thompson and will be headquartered in New York. Mel Edwards, the global CEO of Wunderman, will keep that title, with JWT worldwide CEO Tamara Ingram serving as chairman of Wunderman Thompson.
Wunderman and JWT have been working closely in recent months and sharing several big clients such as Shell, Nestle, and Johnson & Johnson. The merger helps them better operate as a single entity and seffetcevily solve any client issues. While JWT mainly focuses on direct marketing and brand strategies, Wunderman has expertise in data and sophisticated technology skills.
CEO of Wunderman Thompson Mel Edwards and Chairman Tamara Ingram
The recent consolidations reveal several emerging trends in the advertising industry.
1. Traditional advertising agencies are aligning with digital media groups.
Considering the growing influence of digital media in marketing, top executives from ad agencies try their best to embrace new technologies, especially the digital techniques. The creation of both VMLY&R and Wunderman Thompson proved this trend.
The source from Adweek said that “while Y&R has notched several account wins such as Office Depot, Amtrak and Miss America in recent months, it has not been as profitable as the group’s digital and media buying shops.” Like JWT, Y&R was always associated with an image of a traditional, old-school agency that was very active in the past decades. Now, the agency needs to rebuild its identity by embracing new technologies.
Mergers with digital firms is just one way to catch up on digital development. Agencies also find other ways to participate in the game. This June, Ogilvy rebranded itself after 70 years with new visual identity, logo and digital platform, in order to reflect its dynamism and innovation on its brand image.
2. Data is everything.
While we consume a variety of services, our data are consumed by someone else with different purposes. Advertising agencies, for example, are desperate for these data, to learn consumer behaviors. Undoubtedly, access to consumer data will benefit the agencies, as they can provide smarter decisions to advertisers.
Ad giants always promote the idea of using creativity to help clients solve problems. However, in a data-driven world, creativity is not enough; advertisers need to understand their customers, target audiences and competitors first.
JWT noticed this trend, so it decided to work with Wunderman, a media group known for its data analytics.
3. More consolidation in the future.
In the field of advertising, consolidation offers some tempting advantages. Media groups can share resources, technologies, talents and, most importantly, clients. When looking for advertising agencies to promote their products and ideas, companies would like to choose those that can provide a full range of services.
The advertising pitch sometimes can be exhausting. However, an agency with expertise in different fields is more likely to stand out. Executives from top agencies must also realise this and regard consolidation as a great way for them to achieve their goals.
