Tagged: WPP

Here’s How Each Major Ad Agency’s Stock Is Looking as the Industry Prepares for the Trump Era

Before Nov. 8, the big advertising holding companies faced a straightforward, slow-growth future. The business would continue to evolve, and the agencies would continue to adapt by expanding their capabilities, especially in digital media. But the election cast a blanket of doubt on the prospects for the major players.

"To be clear, there was little uncertainty during the campaign," says Brian Wieser, an analyst at Pivotal Research Group. "Most business observers would not have believed that this outcome was possible. Now there is uncertainty."

Industry watchers are grappling with the implications of Donald Trump's victory for the ad business, which had already absorbed one electoral shock with the vote in June by British citizens to leave the European Union. In their last quarterly reports before the presidential election and the first to fully reflect the U.K. balloting, the big holding companies—Omnicom, Interpublic, WPP, Publicis and Havas—offered a mixed reading on the health of the industry. At one end of the spectrum, Interpublic beat earnings expectations and boosted its outlook for the remainder of the year. At the other, account losses took a toll on Publicis, which reported weaker North American sales.

For the ad industry, the big fear is that buyers will simply put their spending plans on hold while they wait and see how the new administration takes shape. If, for example, Trump follows through on his harsh campaign rhetoric regarding international trade, cross-border business could become more difficult.

"We got so little insight into [Trump's] policies and plans from the campaign," notes Tim Nollen, who follows the ad industry at investment bank Macquarie. "What does that mean for trade relations, the strength of the dollar?"

On the positive side, the Trump administration might turn out to be good for the business. "The early indications [are] that Trump wants to promote infrastructure spending, reduce taxes, ease repatriation of cash—and if we see a rise in interest rates and increased inflation, all those would be good for advertising spending if everything lines up right," Nollen said.

Note the key qualification: "if everything lines up right."

In fact, there are reasons to be bullish about 2017. "I want to use the term 'cautiously optimistic,'" said Tom Eagan, an analyst at Telsey Advisory Group. "It may be overused, but in this instance, it really works." Eagan pointed out that some of the worrisome trends from 2015 did not continue into this year. "Twenty billion dollars in account reviews is not normal, but that didn't continue into '16," he said. "So that's positive."

In addition, the growing complexity of the ad business works in favor of the big companies, which are immense repositories of increasingly necessary expertise. Eagan cites the issue of measuring audience size and reach, where media vehicles such as Facebook, the TV networks and cable providers all use their own metrics. "The idea that you could do this yourself is, to me, just impossible," Eagan said. "The agency has been a way to interpret this Tower of Babel."

Here's a look at what to expect over the next 12 months from the important holding companies:

WPP
Share price as of Nov. 30: 17.09 pounds ($21.27)
Market Cap: 22 billion pounds ($27.4 billion)
52-week high/low: 8.75 pounds/12.04 pounds ($23.33/$14.98)

Martin Sorrell, WPP's chief executive, was among the first ad industry leaders to cite Brexit in reporting disappointing results. Sorrell blamed the vote for a slowdown in his company's U.K. business. He may have a tough time making the case. "I don't know if we've seen any concrete evidence that it has hurt ad spending," Nollen said of the vote. In fact, most observers point out that the U.K. won't leave the EU for at least two years, and the contours of that move are still a matter of conjecture. Nonetheless, Sorrell clearly believes he has detected unease among clients, and he has moved to strengthen WPP's businesses on the continent. In addition, the company in late November unveiled a reorganization designed to bolster its GroupM media division. After an investor presentation on the move, Wieser wrote in a report that "WPP remains best-positioned strategically vs. peers and their long-term growth should slightly outperform given the company's business and country mix."

 

Omnicom
Share price as of Nov. 30: $86.94
Market Cap: $20.54 billion
52-week high/low: $88.79/$66.48

Omnicom CEO John Wren has been among the more vocal ad executives on the affect the U.S. election will have on the industry. In October, when the company reported results that slightly beat Wall Street's expectations, Wren said uncertainty surrounding the campaign, particularly the partisan complexion of Congress, was a drag on the business. He apparently got what he wanted. At a conference a week after the election, Wren said the outcome will help Omnicom because the new administration and the stronger GOP congressional majority are likely to lower corporate taxes. If that plays out as Wren expects, few observers will be surprised. "Omnicom has had a lot of good account wins," Nollen said. Analysts polled by Thomson Reuters mostly have Hold ratings on Omnicom stock, which is trading near its 52-week high. In fact, their median price target for Omnicom is slightly lower at $84. The market may have priced in whatever benefits the company is likely to derive from the election results.

 

Publicis
Share price as of Nov. 30: 61.23 euros ($64.95)
Market Cap: 13.82 billion euros ($14.66 billion)
52-week high/low: 69.54 euros/49.95 euros ($73.96/$52.99)

If WPP is in the strongest position heading into 2017, Publicis may be in the weakest. "Publicis has been a loser in accounts and just now cycling through those losses," Nollen noted. Indeed, the company posted the worst numbers among its peers in the third quarter, with organic revenue slumping by 4 percent in its North American business. While that decrease was offset somewhat by gains in Europe, the company still faces a host of questions, including who will be occupying the corner office. Longtime CEO Maurice Levy, 74, has announced plans to step down next year. But observers believe he will continue to play an important leadership role. "Maurice Levy can say he's moving along, but he won't be retiring," Wieser insists. Industry watchers apparently believe the worst is over for Publicis or that new blood, no matter how peripheral, will improve the picture. In a Thomson Reuters survey, a majority of analysts have Outperform or Buy recommendations on the company's shares. And the median price target is 73 euros ($77.43), more than 19 percent above its late-November level.

 

Dentsu
Share price as of Nov. 30: 5,110 yen ($45.17)
Market Cap: 1.51 trillion yen ($13.35 billion)
52-week high/low: 7,080 yen/4,410 yen ($62.59/$38.98)

Japan's biggest ad company, and one of the country's iconic corporate names, has been wracked by scandal over the past few months. First, Dentsu faced allegations that it charged fees to Toyota, another Japanese icon, and other clients for placements that were never made. Then, more seriously, a 24-year-old employee committed suicide, highlighting a corporate culture that apparently encouraged excessive overtime. But the incidents don't seem to have distracted Dentsu executives, who have pursued an active M&A program, the largest being the $1.5 billion deal for Maryland-based digital marketing firm Merkle. Perhaps because of that ability to focus, Wall Street expects the company to outperform the market, with a consensus price target about 11 percent above its stock's current level.

 

Interpublic
Share price as of Nov. 30: $24.07
Market Cap: $9.47 billion
52-week high/low: $24.82/$19.79

Less than two years ago, IPG was embroiled in a battle with activist investor Paul Singer's Elliott Management, a fight settled in early 2015 with a reconfigured board. Since then, the company has been "generally solid" in Nollen's view. "The company's performance has spoken for itself." As a result, the threat of another activist campaign is low. In fact, analysts polled by Thomson Reuters mostly have Buy or Outperform ratings on IPG's stock, with a median price target of $26. In a normal environment, the company might rank among the industry's strongest players. The question will be whether the environment settles into something resembling normal.

 

Havas
Share price as of Nov. 30: 7.61 euros ($8.07)
Market Cap: 3.2 billion euros ($3.4 billion)
52-week high/low: 8.07 euros/6.47 euros ($8.56/$6.86)

With the demise of the Omnicom-Publicis megamerger two years ago, the most prominent M&A talk in the advertising industry revolves around Havas and French media company Vivendi. Both Vincent Bollore, who owns 60 percent of Havas, and Vivendi CEO Arnaud de Puyfontaine have suggested publicly that a combination could be in the cards. The two entities are already tied together, with Bollore serving as Vivendi chairman and holding a 20 percent stake in his potential merger partner. Earlier this year, Bollore nominated his son, Yannick, who serves as Havas CEO, to Vivendi's board. And Bollore's investment vehicle has said it plans to boost its voting stake in Vivendi to nearly 30 percent by next spring. Some sort of union is virtually inevitable.

 

Cheil
Share price as of Nov. 30: 15,100 won ($12.87)
Market Cap: 1.72 trillion won ($1.46 billion)
52-week high/low: 22,800 won/14,700 won ($19.43/$12.53)

Seoul-based Cheil is another company laboring under the cloud of scandal, in this case a broad influence peddling investigation that has also ensnared parent company (and largest client) Samsung. As the probe plays out, the market will likely focus on Cheil's ownership. In June, the company ended talks to sell a controlling stake to Publicis. Any future deals will likely hinge on the outcome of Samsung's larger restructuring efforts.

MDC Partners
Share price as of Nov. 30: $6.20
Market Cap: $338.01 million
52-week high/low: $23.90/$2.74

MDC heads into the new year hobbled by a self-inflicted wound. In November, the company announced it had hired an investment bank for advice on its "financial and capital structure strategy." The move came a little more than a year after CEO Miles Nadal resigned amid an SEC investigation into MDC's finances. The company's public statements since the SEC probe was disclosed have not engendered much confidence. "The news implied that there was a reason for concern that they would not be able to fulfill a media campaign," Wieser suggested. "The lack of specificity was a problem." The problem is likely more troublesome for investors. "The stock pulled back not because of fundamentals but because of equity dilution," Eagan noted. "Capital structure is either debt or equity. They can't add debt because it's already too highly leveraged. So that leaves equity." If the company issues new stock, current shareholders will see their investments diluted. As far as MDC's business is concerned, the company may simply be maturing. "Maybe it's just a normal company now—the years of hypergrowth or high-single-digits growth was not sustainable," Wieser said. "Maybe that was the value that Miles Nadal added to the company."

 

Scandals and geopolitics aside, as the third quarter drew to a close, the ad industry looked to be in good shape heading into 2017. "The big four—big six if you count Havas and Dentsu—are all doing the same sorts of things, investing in the right areas," Nollen noted. "They are doing the right things to position themselves for future growth."

Industry observers agree, however, that uncertainty is bad for the business and the trend now on both sides of the Atlantic is toward greater upheaval. That doesn't mean 2017 will be a grim year. Everything could indeed line up just right. "The issue is: Can we escape this low-growth world?" Nollen said. "And that seems to be what Trump aims to do."

Article originally appeared on Adweek Advertising & Branding: Link.

Lawyers for JWT, WPP and Gustavo Martinez File Motion to Dismiss Discrimination Suit

Lawyers for WPP, J. Walter Thompson and Gustavo Martinez filed motions in New York's U.S. District Court today seeking to dismiss in its entirety the suit filed by global chief communications officer Erin Johnson against her employer this March.

That suit, which inspired headlines around the world, led now-former JWT global chairman and CEO Martinez to resign one week after it was filed. He was immediately replaced by WPP chief client team officer Tamara Ingram.

Today's filing by Davis & Gilbert LLP, the firm representing JWT and its parent company, urges the judge to dismiss the case on the federal, state and city levels. The 30-page document argues that Johnson and her legal team have failed to prove that she suffered any sort of "materially adverse" consequences due to Martinez's behavior, which allegedly included racist and anti-Semitic statements, incidents of sexual harassment and at least one rape joke caught on camera during a 2015 meeting with employees and client representatives at a Miami hotel. It also claims that accusations of Martinez retaliating against Johnson for raising concerns about his behavior to the agency's global chief talent officer Laura Agostini are baseless.

The document calls Johnson's amended complaint alleging violations of the federal Equal Pay Act and Section 1981 of the Civil Rights Act forbidding discriminatory behavior by employers "frivolous." It also argues that she used her relationships with various media outlets to further publicize her case and that a text message sent to Martinez just over a week before her legal team let JWT and WPP know that a suit would be filed disproves her claims about being subjected to a hostile work environment.

In that text, Johnson allegedly told Martinez that she had rejected a job offer from another agency "because I am loyal to you and what you are doing," adding, "I felt like we had a good year together. So I hope I wasn't wrong to stay. Lol"

The filing also states that Johnson's claims regarding "her alleged reduced 2014 bonus" cannot be validated because the reduction of that bonus occurred "before she complained about her bonus in 'late April and early May 2015,' and before she allegedly complained in May 2015 about Martinez's racist comments." It further states that Johnson never clarified as to whether Martinez was made aware of her complaints regarding the aforementioned comments and that she therefore has no direct evidence that his actions were made in retaliation against her.

The filing claims that Johnson mentioned "virtually nothing supporting a hostile work environment claim" during the nine-month period between May 2015, when Agostini told Johnson she would investigate the claims made against Martinez, and the day in February when Johnson and her legal team let the companies know that a suit would be filed.

Regarding the implication that Martinez's behavior created "a hostile work environment" for Johnson (which serves as the subject of her state and city-level claims), the filing argues that many of the incidents in question are "irrelevant" since they occurred before she "purportedly engaged in protected activity," meaning activity that happened after the first formal complaints were made against Martinez in May 2015. According to the document, the "alleged racist and anti-Semitic comments referenced in the Complaint" also "have no bearing on her retaliatory harassment claim" since she is neither Jewish nor a minority.

Johnsons's initial suit stated that, after she told Martinez that his rape jokes were inappropriate, he told her to "come to him so he could 'rape [her]' in the bathroom." But today's filing states that such incidents do not amount to sexual harassment because her complaints contain "no allegation that he actually talked about 'the sex.'"

The argument holds that, while Martinez's conduct as alleged may have been "offensive," it was not illegal because "Courts have repeatedly held … that a few sexual or racially-charged comments do not create a hostile work environment." The document goes on to cite various cases that included "more offensive" behavior but were not ruled to have created such an environment since they were "petty" and, in several instances such as the Miami meeting, were not directed at Johnson herself.

According to the filing, any adverse consequences Johnson suffered for filing related complaints—including the reduction of bonuses, the removal of certain duties from her schedule and her exclusion from executive meetings—amount to only "minor annoyances" that cannot be considered retaliation by her employer. "Not only did Johnson remain as Chief Communications Officer," the document reads, "but she fails to allege how losing these minor duties adversely impacted her job." WPP's lawyers also argue that Johnson failed to prove definitively that Martinez slashed her 2015 bonuses in response to the complaints she made against him and that her request to be placed on paid leave following the suit's initial filing "belies any claim that such leave is materially adverse."

Finally, the document argues that the claim that these allegedly retaliatory acts "dissuaded Johnson from complaining" or otherwise affected her ability to do her job is disproven by the very filing of her suit.

Lawyers for Martinez himself, who hired a separate firm after resigning from his job, also filed a separate motion today to dismiss Johnson's claims.

Article originally appeared on Adweek Advertising & Branding: Link.

E-Commerce Site Jet.com Taps Maxus for Media

Members-only e-commerce site Jet.com went shopping for a media agency and wound up hiring Maxus.

That shop, a unit of WPP's GroupM, takes over from Ocean Media. All told, the client plans to spend about $80 million annually on a multi-channel media plan. "They are a business fueled by an incredible vision and culture and this relationship builds on our commonly shared goal to be leaders, innovators, and market disruptors," said Maxus Americas CEO Steve Williams, in a statement.

Liza Landsman, Jet's chief customer officer cited Maxus' "full-service capabilities and the buying leverage" through GroupM as key drivers for the assignment.

There was no formal review for the business.

Jet.com launched with considerable fanfare last summer, supported by TV ads from R/GA, which used the line, "The biggest thing in shopping since … shopping." Other shops such as SS+K and Circus Maximus have also worked on elements of the brand's creative.

Jet.com offers its 2.5 million members discounts on a wide range of products. Initially, the service charged a $50 fee, but made subscriptions free in October. Marc Lore, the driving force behind of Quidsi, Diapers.com, is the co-founder of Jet.com.

Many industry observers believe the venture—which is privately held—faces an uphill climb. By some estimates, Jet.com would have to generate $20 billion in revenue by 2020 to turn a profit.

Article originally appeared on Adweek Advertising & Branding: Link.

6 Months After Launching, E-Commerce Site Jet.com Hires Maxus for Media

The members-only e-commerce site Jet.com went shopping for a media agency and wound up hiring Maxus.

That agency, a unit of WPP's GroupM, takes over from Ocean Media. All told, the client plans to spend about $80 million annually on a multi-channel media plan. "They are a business fueled by an incredible vision and culture, and this relationship builds on our commonly shared goal to be leaders, innovators and market disruptors," said Maxus Americas CEO Steve Williams in a statement.

Liza Landsman, Jet's chief customer officer, cited Maxus' "full-service capabilities and the buying leverage" through GroupM as key drivers for the assignment.

There was no formal review for the business.

Jet.com launched with considerable fanfare last summer, supported by TV ads from R/GA, which used the line, "The biggest thing in shopping since … shopping." Other shops such as SS+K and Circus Maximus have also worked on elements of the brand's creative.

Jet.com offers its 2.5 million members discounts on a wide range of products. Initially, the service charged a $50 fee but made subscriptions free in October. Marc Lore, the driving force behind Quidsi and Diapers.com, is the co-founder of Jet.com.

Many industry observers believe the venture—which is privately held—faces an uphill climb. By some estimates, Jet.com would have to generate $20 billion in revenue by 2020 to turn a profit.

Article originally appeared on Adweek Advertising & Branding: Link.

Ogilvy Has Named a New Global CEO

The speculation about a successor to Miles Young is over: John Seifert is the new Ogilvy & Mather worldwide CEO, effective immediately. Young will continue as worldwide chairman until Sept. 1, when Seifert also assumes that role.

The 57-year-old Seifert will retain his duties as chairman and CEO of Ogilvy North America, but the agency expects to name a replacement for him in that job.

Last June, when word leaked about the Young's decision to leave advertising for a top administrative post at his alma mater, Oxford University, the news came as a surprise. Since then, Ogilvy parent company WPP has worked with Young, to consider both external and internal replacement candidates.

A leadership shift back to NYC

When the Englishman was tapped to replace Shelly Lazarus as Ogilvy's global CEO in 2008, the move was seen as a break from the more traditional power corridors at Ogilvy New York headquarters.

Young's career was forged outside America, first in London, then in Europe and later in Asia, where he built those agency operations into the largest and most successful in the region while also working on WPP initiatives. His choice as CEO was perceived as a sign that a larger global view, emerging-market dynamism and new forward-thinking about technology and business growth would inoculate O&M's larger global culture.

Now with a return to a New York-based American Ogilvy executive—Seifert joined the agency as a summer intern and has spent all 37 years of his career at the agency—the move is a reinforcement of the high importance of the agency's American operations and headquarter execs like Seifert who have honed close relationships with multinational clients like American Express and BP.

Ensuring a continuity in Ogilvy leadership was a deciding factor in the CEO, according to Young. "The reason we chose John was he epitomizes the classic Ogilvy values.The critical thing about this brand is the culture behind it. (I've told Seifert:) 'Don't skimp on that.'"

Seifert, who has been part of Ogilvy's worldwide executive committee since 2009, says he'll be sticking with that group's "very robust agenda". More specifically: "Nothing is more important than the work. In this new digital age we need to build client business plans as they relate to the modern business environment. … I wouldn't trade O&M's assets for those at any other company. The trick is to manage with agility so we can stay focused on the future and be prepared for what's coming."

Expanded roles for Heath, O'Donnell, Tham

One thing Young has said he's learned over the past seven years is that running the $2.7 billion Ogilvy multidisciplinary network is too big a job for one person. As part of the new management changes at the O&M, the network is expanding the responsibilities of Ogilvy's two regional directors: Paul Heath, chairman, CEO of O&M Asia Pacific, and Paul O'Donnell, who holds the same title in Europe, Middle East, and Africa (EMEA) have been named worldwide executive directors.

Heath's focus will be on global business development and O'Donnell, agency transformation, which includes looking at new operating structures, ways of working and new specialist opportunities. Heath has been based in Hong Kong, but will be spending more time in the U.S., with a possible move there, and O'Donnell will remain in London.

After he joins Oxford in September, Young will continue to work with key agency and WPP clients in a non executive role. But as he prepares for that transition, the agency also sought to underscore the importance of his longtime ally, worldwide chief creative officer Tham Khai Meng, who will now become co-chairman of Ogilvy's worldwide board.

The two worked together for eight years in Asia, with Tham relocating to New York with Young and assuming global creative duties. During Tham's time in that role, O&M's global creative profile has boomed. In 2015 the network was named Network of the Year for the fourth consecutive year at the Cannes Lions Festival of Creativity.

While Seifert doesn't have the same hands-on managerial international experience as his predecessor, he was responsible for a portfolio of 25 global clients totaling nearly $1 billion in revenue before taking on the leadership of O&M North America in 2009. He has been responsible for clients and held general management positions in Los Angeles, Chicago, Bangkok, and Singapore.

Seifert went back to New York in October 1992 and spent the next four years traveling for American Express about 70 percent of the time. He led the reengineering of American Express internationally when it became centralized in New York and London and launched BP globally in 2000.

Article originally appeared on Adweek Advertising & Branding: Link.

Survey: Ad Industry Could See More Mergers and Acquisitions in 2016

Merger and acquisition activity among marketing, media and related technology firms could heat up in 2016, with more prospective sellers seeking deals and buyers' interest remaining high.

Fifty-four percent of respondents of an annual industry survey said they would explore a sale of their company next year, according to mergers and acquisitions firm AdMedia Partners, which queried executives in the U.S. and abroad. That figure represents a huge uptick from last year's survey, in which 40 percent said they would consider selling. 

At the same time, interest among potential buyers held steady, with about two-thirds of respondents reporting they would seek acquisition targets.

Intriguingly, 79 percent of respondents advised both buyers and sellers to act now. This marks the first time that percentage has been identical in at least a decade, said AdMedia managing director Seth Alpert. "It's a good time for both buyers and sellers" looking to take advantage, respectively, of the current low rates and strong valuations.

Plus, "it's not just the holding companies seeking deals," Alpert said. "The kinds of buyers for marketing services firms has really expanded." One example of this trend, he said, was ICF International's acquisition of midsize advertising shop Olson for $295 million. Prior to that deal, ICF, which specializes in customer engagement and systems integration, was virtually unknown in the agency arena.

"On the part of buyers, there's a recognition of all the things that are changing, and the way to deal with that, and to remain competitive, is to augment their capabilities," Alpert said. "And the fastest and perhaps safest way of doing that is acquiring a company that's doing what you aren't doing, and doing it successfully."

Potential sellers, of course, saw Olson fetch premium prices, and they naturally want to ride the gravy train. More recently, Essence Digital was gobbled up by WPP's GroupM, and Groupo ABC was acquired by Omnicom's DDB.

Sectors rise and fall

Three sectors saw a significant increase in respondents' interest compared to last year: market research, ad tech and custom content/native advertising. "You've got a sense that just being a great creative shop, it's nice, but it's not enough anymore," said Alpert. "Certainly, if you're one of the major buyers, you've already got plenty of that stuff," so bulking up in other areas makes sense.

Somewhat surprisingly, high-growth sectors such as mobile, analytics and CRM/database marketing saw steep drops in respondent interest for possible acquisition and expansion. (It should be noted, however, that analytics, while down sharply year over year, remains among the hottest areas overall.)

One possible explanation, Alpert said, is that respondents believe there are few quality companies in these sectors left to purchase. That could, in turn, drive up asking prices for remaining targets and give prospective buyers pause.

And, despite the continued buzz around mobile, prospective buyers might believe the category has a specific set of limitations.

"That's a completely project-driven business," Alpert said. "Once you've completed the app for whoever the heck it is, you're done. Project-driven businesses are really much harder to sell—but not impossible."

Here's a page of the report that shows the most desired sectors:
 

 

 

Article originally appeared on Adweek Advertising & Branding: Link.

GroupM Adds The Exchange Lab to Its Stable

WPP's GroupM has added The Exchange Lab, a marketing technology firm, to the fold in a move that boosts its programmatic capabilities.

The Exchange Lab is best known for its proprietary trading platform, Proteus, which unifies all demand side exchanges and platforms—such as AppNexus, MediaMath and The Trade Desk—into a single touch-point for greater insight and efficiency. By integrating Proteus into GroupM, the company believes it can improve the measurement and allocation of client budgets across all of its programmatic partners.

With 130 employees in London, New York, Singapore and other markets, The Exchange Lab will be housed within Connect, GroupM's worldwide data and technology organization (rebranded from GroupM Interaction in May). Connect has 2,000 staffers and operates in more than 50 countries. The Exchange Lab will maintain its unique brand and continue working for clients including Virgin Holidays, Volkswagen, A&W, Glasses Direct and Vue Entertainment.

"Adding The Exchange Lab's talent and proprietary technology accelerates our development," said Connect chief executive Rudiger Wanck. "Likewise, GroupM's unparalleled scale and innovative media partnerships will terrifically enhance The Exchange Lab's client services."
 
Terms of the deal were not disclosed.

The Exchange Lab CEO and co-founder James Aitken is stepping down, succeeded by executive chairman Chris Dobson. Co-founder Tim Webster continues as chief strategy officer.

Among the major holding companies, WPP has been notably acquisitive this year, making several moves to enhance GroupM's operations. Last month, Essence Digital—one of Google's key global agency partners—joined GroupM's portfolio, and Greenhouse Group, a data-driven digital marketing company, came aboard in June. 

Article originally appeared on Adweek Advertising & Branding: Link.

WPP Will Merge Its Holdings Down Under With STW and Up Its Stake in the Company

Continuing a year of expansion on many fronts, WPP Group plans to merge its holdings in Australia and New Zealand with longtime regional partner STW Communications and increase its stake in the company from about 25 percent to 61.5 percent.

The combined operation would generate annual revenue approaching $800 million and employ more than 5,000 people across 75 companies.

STW CEO Mike Connaghan told The Sydney Morning Herald, "Bringing the two together, to me, always made a lot of sense, it was just making sure we could get a sensible deal done. WPP was very keen to have its businesses involved in the transaction so it could get to a place where it has local management of all the assets of WPP and STW and that's my new job with the new company."

Most of WPP's best-known brands—including Grey, JWT, MEC, Mindshare and many others—would become part of the new entity, which Connaghan will lead.

In a statement, WPP said the merger continues its "strategy of investing in important geographic markets and to advance 'horizontality' to ensure our people work together for the benefit of clients."

The union is subject to the approval of STW shareholders and Australian regulators. After the deal goes through, STW will change its name to align with WPP.

Among the world's top ad players, WPP has been especially aggressive this year, picking some 40 companies in numerous sectors across various regions. For example, a month ago, WPP acquired independent Essence Digital Media. Shortly before that, WPP and Acquira, a digital experience firm, launched a global alliance to develop cloud-based solutions for clients.

Article originally appeared on Adweek Advertising & Branding: Link.

L’Oreal Sends Its Media Business to WPP’s MEC After an 8-Month Review

The American wing of French cosmetics giant L'Oreal has chosen WPP's MEC as its new media agency of record after a review that lasted eight months.

The L'Oreal USA review began in April after Nadine Karp McHugh, svp of omni media, strategic investments and creative solutions, joined the company from Colgate-Palmolive. It pitted MEC against incumbents UM and DigitasLBi, among others.

"MEC brings a shared vision for the future of our ever-changing business, strong digital expertise and leadership with truly integrated teams built for us, and the tools and technology to develop omnimedia solutions," Karp McHugh told Adweek.

Moving forward, MEC will handle integrated media planning and buying for TV, print and digital. Those responsibilities had been split between Publicis Groupe's DigitasLBi (digital) and IPG's UM (TV and print). The larger GroupM—which includes MEC as well as MediaCom, Mindshare and other WPP units—will oversee consolidated buying duties for the client. Karp McHugh said, "Combined with the buying power of GroupM, we believe that we've found the perfect partner to help us co-create the future of beauty along with our media partners."

"We are delighted by the appointment and the opportunity to expand upon our already strong relationship with L'Oréal, a leader with a deep heritage of innovation in beauty for all," said MEC's North American CEO Marla Kaplowitz. She added, "Our agency's data and insights-led planning approach to media will ensure each brand's vision is fully realized as we partner to further define the future of marketing."

The win follows MetLife's October decision to consolidate a majority of the buying and planning duties tied to its $100M U.S. business with MEC. There was no review for that account.

UM and Omnicom Media Group have been two of the biggest winners in the year-long round of media reviews insiders have referred to as "Mediapalooza," with OMG picking up P&G's business earlier this week in a win big enough to prompt the creation of a separate media network. The L'Oreal decision also marks another loss for Publicis Groupe, which announced an internal restructuring initiative before the P&G decision came down this week.

Kantar Media estimates L'Oreal, which includes such top beauty brands as Maybelline and Lancôme, spent $870 million on media in 2014, a slight decline from the $930 million it spent the year before. 

Article originally appeared on Adweek Advertising & Branding: Link.

Global Agency of the Year: Grey’s Work Sparked Cultural Conversations Worldwide

Grey celebrated its performance at the Cannes Lions in June with leather, whips and chains. The WPP Group agency hosted an S&M-themed "Fifty Shades" bash on the roof of the JW Marriott, high above the shimmering Mediterranean.

The party began late Thursday night and ended some time Friday morning. Dancers dressed as dominatrices undulated onstage to a pulsing electronic beat that echoed off the bustling Croisette below. Tipsy leaders from the advertising, entertainment and tech industries jostled one another to enter a photo booth to have their pictures taken—often with other partygoers in salacious group shots—on a four-poster bed fitted with black silk sheets. Those images were instantly beamed onto a giant screen above the outdoor dance floor. "The vibe was buzzing and the energy was off the charts," recalls Grey worldwide creative chief Tor Myhren.

When word began spreading that Grey had won more than 100 Lions at the festival, "Every single person on that roof was screaming, hugging and losing their minds," Myhren says.

The soiree was jammed with hundreds of revelers, filled well beyond capacity, and even Cannes CEO Philip Thomas was stuck downstairs, denied entry by the Marriott's security detail. Thomas texted Myhren, begging the CCO to intercede so he could join the rowdy fun. "At that moment, it struck me how huge this night was," says Myhren. "It was the night we put Grey's global creative reputation on the map. Not just in New York or London, but every corner of the world."

Grey's impressive week saw the network win 113 Lions, triple its take from the previous year, and an agency record. The final tally: 21 gold (25 if you count its Innovation and Product Design trophies, two in each category), 36 silver and 48 bronze. The network's efforts merited four Grand Prix statuettes: two for Volvo's "LifePaint" and one each for Volvo's "The Greatest Interception Ever" and SoundCloud's "Berlin Wall of Sound." While Grey's WPP sibling Ogilvy & Mather won 10 more Lions overall, tops for the festival, it failed to score a single Grand Prix.

For Grey, perhaps the most significant aspect of the performance was the fact that offices in 18 countries scored across 20 diverse categories, including film, radio and outdoor, but also cutting-edge disciplines such as mobile and creative data. "No one at Grey, if the truth be known, thought that we would have a showing of that magnitude," says Grey Group CEO Jim Heekin.

Grey also netted three gold Clio Awards: two for SoundCloud out of its Düsseldorf, Germany, office, and one for the Ministry of Tourism & Transport for the country of Ecuador from Maruri Grey. Counting silvers and bronzes, Grey offices secured a total of 12 Clios.

Ultimately, 2015 represented the culmination of Heekin's decade-long quest—in tandem with Myhren, now in his second full year leading global creative—to transform the 98-year-old agency from an also-ran into an industry leader. This marks the second time in three years that Adweek has named Grey its Global Agency of the Year. When the network scored that honor in 2013, "it was about two big things," Heekin says, "[winning] Gillette and the inordinate success of our New York and London agencies. In '15, the difference is the depth and breadth of what we have. We've had five or six big multinational account wins—big, famous brands. And creatively, it's coming from everywhere. It's not just London and New York. We are deeper and broader in terms of talent and the number of offices that have gotten on the success train. That's the difference. To me, that's the biggest thing."

Industry insiders describe Heekin, 66, a straight-shooting, hard-charging second-generation agency leader, as the consummate account guy, with a genius for new business acquisition and client retention, and an abiding respect for creative that few "suits" in the business display. Myhren, 23 years younger, is viewed as an affable, cheeky creative leader, whose goofy music videos—including an ABBA-inspired song-and-dance routine roasting Heekin for his 10 years at Grey—have become legendary. Those who know Myhren say he's not afraid to crack the whip—like one of those Fifty Shades Cannes dancers—in his drive for perfection. Twice a year, he convenes a Creative Council of top creative directors from around the network to rank every office based on a point system, and he constantly challenges poor performers to improve.

Above all, colleagues say, Heekin and Myhren are intensely focused, driven leaders who inspire their teams to exceed expectations. "They took, not a second-rate but a third-rate agency, and turned it into a powerhouse," notes industry consultant Avi Dan. "The job the two of them did—I don't recall anything like this in the 30 years I've been involved in advertising."

Making global strides

Along with its creative triumphs, Grey enjoyed a robust new-business performance across all regions this year, adding global assignments in high-profile pitches from Emirates Airline (Grey led a WPP team christened Team Air), Motorola and Pandora Jewelry.

"We went to Grey to help Pandora establish itself as an affordable luxury-jewelry brand" as opposed to a "charm-bracelet brand," says Charisse Ford, Pandora's CMO. "Grey pitched the concept of 'The Art of You,' the idea of the consumer expressing herself every day through her jewelry." That campaign, launched in April, "helped shift the perception of the brand across key purchase drivers. We have seen increased engagement in social and tripled our earned media expectations."

Myhren cites Emirates as a prime example of the global network flexing its muscle. "Account and strategy were led out of London, and I oversaw the creative," he says. The team "brought [the pitch] to life creatively in parallel paths: one from New York and one from London. We often do this, where we create two totally different campaigns with zero overlap. Then, several days before the pitch, we either combine the best of both worlds or present both ideas separately." In this case, Grey went in with both concepts blazing, making its final presentation with WPP CEO Martin Sorrell on hand to deliver opening remarks. "We finished early and were in and out in 90 minutes," Myhren says. "Pitches are weird, and you never know. But I had a hunch we'd win this one, and we did."

Grey also expanded its relationship with several existing clients. Over the summer, the New York office leveraged its standing as lead agency for DirecTV to add a campaign touting the AT&T/DirecTV union, and was ultimately tapped to handle the new AT&T Entertainment division. Separately, the network picked up an estimated $200 million in business from longtime client Procter & Gamble when the company moved Gillette's Venus, Braun and Art of Shaving assignments from BBDO. "That was a tremendous source of pride for the agency," says Myhren. "For P&G to show that kind of faith in us [without a formal pitch]—that was huge."

Other additions from new and existing accounts in various global offices included Vodafone, General Mills, Fidelity, Lego, Walmart, LendingTree and Walt Disney. There was just one notable defection: Olive Garden, which will be off the books in early 2016.

All told, Grey's worldwide revenue rose 5 percent in 2015 to just over $800 million, no easy feat for a network its size. Digital revenue rose more than 20 percent compared to 2014.

Shoring up its global team, Grey added or promoted numerous executives. One of the most prominent leadership moves came as 2015 began, with Andreas Dahlqvist, a key driver on McCann's General Motors team, taking the CCO reins at Grey's New York flagship, freeing Myhren to concentrate on his global role (though he continues as N.Y. president).

"I'm seeing a real need to leap forward again. Big clients are asking for a new way to go to market, and I think we're extremely well poised to take on that challenge," says Dahlqvist. "Our opportunity is to move past just telling a story for a brand to really figuring out how we create stuff that has a true value to people."

Meanwhile, in London, strategy chief Lucy Jameson was promoted to CEO, with Nils Leonard moving to chairman while retaining his CCO title. "For us it's all about culture—developing our own culture, decoding our clients' cultures and helping them make more impact in popular culture," Jameson says. Echoing Dahlqvist, she adds: "If we are going to be more impactful in culture, we have to find new ways to be entertaining and/or useful. So, next year, I'd like to see us diversifying even further beyond our current capabilities."

It's all about competitive spirit, agree Grey leaders. "Grey is built with people who have fighter mentalities, and we're actually at our best when we have something to push up against," says North American CEO Michael Houston. "In 2015, that thing we pushed up against was size and traditional work. We wanted to demonstrate that size and scale could be meaningful in a creative organization."

Moving ahead, Grey vows to keep pushing to beat the competition into submission—creatively speaking, of course—at Cannes and beyond.

Check out this gallery of Grey's most memorable work.

This story first appeared in the Dec. 7 issue of Adweek magazine. Click here to subscribe.

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