Dentsu and WPP Buy Digital Shops Steak and in U.K., Brazil

WPP's Possible Is About to Acquire Sao Paulo Digital Agency Gringo

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Dentsu and WPP Group each announced digital ad agency acquisitions today, and WPP-owned Possible Worldwide is expected to close another one tomorrow, buying creative Brazilian digital shop Gringo.

WPP is buying a 70% share in Brazil's largest independent digital agency, Sao Paulo-based, which will remain a standalone agency within the group. Opened in 1999, reported revenue of $17.2 million in 2010 and has 200 staffers. Clients include Unilever and Campari. All six managing partners will remain in their roles.

Possible Worldwide is expected to announce its first acquisition since the agency was formed in February. Sao Paulo-based Gringo will sadly lose its distinctive name and become Possible Sao Paulo. The 65-person agency, run by Andre Matarazzo and Fernanda Jesus, works with Coca-Cola, Absolut Vodka, Microsoft Corp. and local airline TAM. Possible is taking a majority stake.

Dentsu Europe, meanwhile, is acquiring 100% of London-based Steak Group, which also has offices in New York and Melbourne. Clients include Virgin Holidays, Trump Hotels and Best Western.

The acquisition of Steak, which was founded in 2005 and has 94 staffers, doubles the size of Dentsu in London. Steak will be part of Dentsu Network West, which covers North America, Latin America and Europe, and will report into London-based CEO of Dentsu Europe, Jim Kelly.

"Almost all briefs have a digital outcome, so you've got to have all the relevant skills," Mr. Kelly said.

In January, Mr. Kelly did a deal to bring German digital agency Social Thinkers into the Dentsu fold, and he'll keep looking for more acquisitions in Europe, where Dentsu has offices in Milan and Brussels as well as Dusseldorf and London.

"London is our hub, and we are looking for other opportunities in this market that will complement what we've got," Mr. Kelly said. "Germany is another big market and most agencies operate in more than one city there."

Dentsu Dusseldorf opened in April, marking the first time that a Dentsu-branded agency has operated in Germany, Europe's biggest ad market.

Dentsu Network West's CEO is Tim Andree, Dentsu's highest-ranking American. It was Mr. Andree who persuaded McGarryBowen to sell to Dentsu back in 2008, a move that has paid off for Dentsu. McGarryBowen opened a London office in 2010, was named Ad Age 's Agency of the Year in January 2010 and won Burger King's U.S. business this week.

WPP announced the deal at the company's annual general meeting today in Dublin. At the meeting, WPP also issued a trading update for the first four months of 2011, showing worldwide revenue was up 6.2% over the period -- slightly down from the 6.7% rate WPP announced when it reported first-quarter results for 2011.

WPP, whose agencies include Ogilvy & Mather, JWT, Y&R, Grey and Group M, has continued its pattern of strong growth in the U.S., where revenue was up by 8%. Revenue in the BRIC countries -- Brazil, Russia, India and China -- grew by more than 17% for the first four months of 2011. As a region, Latin America grew by 10% and Asia by 12%. The only regions not to show growth were Japan and the Middle East.

In a statement, WPP outlined five chief areas of economic concern: struggling Western Europe economies like Greece and Ireland, the U.S. failure to tackle debt reduction, rising commodity prices, the disruption caused by Japan's earthquake, and the uprisings North Africa and the Middle East. Even so, WPP said the company is still "cautiously optimistic about the prospects for the remainder of 2011 and, indeed for 2012, although 2013 may be challenging, as a re-elected or new U.S. president has to finally wrestle with the colossal fiscal deficit, post-election."

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