The Rundown: Why GroupM’s merging of agencies signals an urge to simplify the portfolio

By Michael Bürgi

WPP’s media arm, GroupM, yesterday announced it is pairing two sets of its media agency brands and folding several other mostly programmatic firms into one unit, which amounts to a further reduction in the number of its brand names and operating units.

And that, from speaking with a number of people with knowledge of GroupM and WPP, appears to underscore one of the main motivations behind the moves — streamlining in the face of rapidly evolving and consolidating client priorities.

The move on paper resembles the spate of mergers on the creative side that CEO Mark Read engineered in 2018, which took strong up-and-coming brands and merged them into legacy agencies that had lost some of their sizzle. But that’s where the similarities end.

Though cost-savings will be realized in the end by reducing the number of back-office needs when agencies merge, it’s not like either Mediacom or Mindshare were struggling. According to Convergence’s 2021 new business rankings, GroupM placed second overall in net new business globally and first in both APAC and Latin America, and secured $11.5 billion in wins and retentions.

First, the facts

Digitally-leaning Google specialty shop Essence is merging with Mediacom to form EssenceMediacom, which will be led by Mediacom’s global CEO Nick Lawson. Essence’s global CEO Kyoto Matsushita, takes on the new role of CEO of WPP Japan.

Mindshare will absorb the elements of former Ogilvy digital and performance offshoot Neo that it wasn’t already working with.

And finally, a grouping of programmatic firms (Xaxis, Finecast) and other centralized “activation” units known as GroupM Services, will be renamed GroupM Nexus, to be led by Xaxis CEO Nicolas Bidon.

GroupM, through a spokesperson (global CEO Christian Juhl was not made available for comment) touted the growth potential in these unions. “We have many jobs open and plan on expanding quickly. And we anticipate career development and opportunities for all our people with increased exposure to meaningful work, new ways of thinking and ground-breaking insights redefining the future of media as well as unique access to the collective intelligence, mentorship, and capabilities of a globally connected organization,” said the spokesperson by email.

A number of sources with history in WPP and GroupM ultimately agreed there’s decent synergies to be squeezed out of these unions. “Merging Mediacom and Essence creates very complementary capabilities in the same way that putting Neo fully into Mindshare creates complementary capabilities,” said one former high-ranking WPPer.

A few other observations are worth mentioning

Some observers in the industry were surprised the Essence name survived the merger — Mediacom is a better-known brand — but it is where Juhl rose to his current position. “It wouldn’t surprise me if Essence becomes the brand name moving forward,” mused one former WPP executive. One observer also noted that Essence, in merging with Mediacom, also adds non-digital expertise it did not possess — even when it was paired with the now-defunct Maxus brand several years ago.