June 20, 2012
Cannes this year is hosting more and more evidence of the disappearance of lines between “digital” and “advertising”: A mobile category was launched; the new Branded Content and Entertainment category includes subcategories such as “best use or integration of user generated content”; Twitter co-founder Jack Dorsey was named Media Person of the Year and . . .
. . . WPP used the international advertising festival to announce it is acquiring digital agency AKQA and incorporating it as a separate network within WPP.
AKQA is a great pickup for WPP. It's not only one of the biggest indies left but one of the best at blending creative and technology skills in one organization — a mix that doesn’t always live together easily.
It also fills a hole for WPP. AKQA aspires to a category of agencies I call “brand transformers” that are about more than communications and look to leverage digital capabilities to help clients enter new adjacent product and service areas.
Very interesting that it will be a standalone brand and not folded into one of WPP’s existing networks. Digital agencies VML and Blast Radius bring similar capabilities but are locked in the Y&R network; WPP gains flexibility by having AKQA “at large” in its holdings. In addition, AKQA is a little too big to fold into another network easily, but will need to build heft quickly if it wants to remain separate. Otherwise, in a couple of years, WPP will merge it with other assets.
I think it’s likely Interpublic and Omnicom will react. WPP clearly sees digital as essential to its future. This acquisition definitely puts some distance between WPP and Omnicom, which had been pretty close, and Interpublic, which has a couple of strong assets but doesn’t have the strategic focus that WPP and Publicis do.
What might be the next acquisition? Sapient’s name come up, but as a $1.5 B market cap public company, this would be a tougher acquisition — not the kind of deal you can do over cosmopolitans at Cannes. LBi and Agencies of Change are both interesting possibilities, kind of mini-networks in their own right that could stand alone (and absorb other smaller assets in the “other holdings” bucket in Interpublic or Omnicom) or small enough still to fill out one of the other agency networks. But the pickings in the US are looking thin. With a growing appetite from clients for global digital capabilities, the next wave of acquisitions may well focus on Europe and the UK — another point in LBi's favor.
Cannes and WPP this year both make the statement that digital is increasingly a core skill in today’s marketing world.