AKQA, Grey merger naming sparks employee uproar and 'upsets' P&G
When WPP announced it was merging Grey and AKQA, its press release said that "The AKQA Group will launch with the AKQA and Grey brands, which will be integrated over time into a single company." The combined 6,000-employee agency would be dubbed AKQA Group, leading to media reports, including in Ad Age, that the Grey brand would be killed off in favor of the digital agency's moniker. Campaign, which broke the story, initially wrote that the formation of AKQA Group “means the end of the Grey brand” which would eventually “be dropped.”
"Grey has evolved many times over its 103 years and this is the next step in its evolution," Grey Worldwide CEO Michael Houston told Ad Age on the day of the announcement, Nov. 11. "As someone who works in the business of brands, while names are obviously important, brands are much more than their names as well."
Enter Procter & Gamble.
According to three people close to the business, though the client was briefed ahead of time on the merger itself, its executives were distressed to read in trade papers that the Grey name would be abandoned in favor of AKQA. This prompted P&G Chief Brand Officer Marc Pritchard to call WPP CEO Mark Read, demanding to know why he wasn't informed that the Grey brand would be retired. And P&G is a client WPP can't afford to anger: According to Ad Age Datacenter estimates, P&G spent $4.3 billion on measured media in the U.S. in 2019.
Grey has worked with the consumer goods giant for seven decades. In the past few years, Grey has been behind some of its most defining work, tackling toxic masculinity in “The Best a Man Can Be” for Gillette; and recently working with Grey-backed Cartwright to urge the silent majority to be anti-racist in “The Choice” for P&G.
Though Pritchard declined to comment on the call to Read, he did confirm through a spokesperson that he "was upset" by news reports saying the Grey name would be "going away. He was told that this is not the case and that Grey 'will remain intact' and the Grey name is not going away," the spokesperson said.
WPP, in fact, maintains that the AKQA Group integration is going to take time "based on client and market needs." The timetable, the company says, "will vary by market and client," and the Grey name will remain "for some time—for as long as it makes sense to do so in each case."
So was this a case of WPP walking back a decision to accommodate an unhappy client, or a was it a vague communication that confused the press, clients and many of Grey's rank-and-file employees?
That's, well, a gray area.
One executive with knowledge of the situation insists there was a plan to ditch Grey entirely that was "changed to separate brands because of P&G displeasure." Another said that WPP leaders added "Group" to the AKQA name for the merged agency as a concession to include a part of the Grey name, as in Grey Group.
A WPP spokesman responded in a statement: "Major clients were of course consulted on the plans in advance. As always, we listened to those clients, who helped to shape our approach as we bring together the capabilities of two great agencies."
Whatever the case, P&G seems to be appeased. "P&G is looking forward to continuing to work with Grey and their talented people, who we deeply value," Pritchard added in his statement. "We’re expecting enhanced capabilities brought to Grey, and for the merger to be largely seamless to our brands and company."
Internally, there was "chaos," as one exec describes it, over the disposition of the Grey name, according to five executives interviewed by Ad Age, who say it wasn't the merger that surprised employees and clients, but the positioning of AKQA as the dominant shop.
Those seeking clarity were thwarted at a virtual “global town hall” with AKQA Founder Ajaz Ahmed and Grey Worldwide CEO Michael Houston, according to a Grey exec who attended. The exec says that employees expecting a town hall were surprised to instead encounter a pre-recorded broadcast between Ahmed and Houston as well as John Patroulis and Justine Armour, Grey’s worldwide and New York chief creative officers, respectively. No one was given a chance to ask questions of agency leaders, which galled many Grey employees, this person says, who were “blindsided."
“They made a mess of this and clients got upset,” said another person familiar with the matter. “Grey people are furious and resisted completely.”
WPP declined to comment.
According to two execs close to the matter, WPP’s directors have been twisting Read’s arm to get the ball rolling on further consolidation moves before the end of the year—pushing him to merge Grey and AKQA and, most recently, fold Geometry into VMLY&R. One exec says the board criticized Read for not doing enough in the two years since the 2018 mergers of VML and Y&R and Wunderman and J. Walter Thompson.
The company’s board of directors is run by Chairman Robert Quarta and this year appointed new directors WPP Chief Financial Officer John Rogers, former Apple Retail Senior VP Angela Ahrendts, UCB Executive VP and Chief Financial Officer Sandrine Dufour and Crossword Cybersecurity Founder-CEO Tom Ilube.
Business Insider reported in October that the WPP board hired global management consulting firm McKinsey & Co. to help return the holding company to growth, and that it would be rolling out a plan to do so in the coming weeks. It’s likely the mergers are part of that plan.
For the recent third quarter, WPP reported a 9.8% decline in revenue to $3.8 billion, or a 5.5% decrease in like-for-like sales. By region, the U.S. saw a 5.5% decline in revenue less pass-through costs in the third quarter while the U.K. fell 6.5%, Germany decreased 1.8%, Greater China slipped 16.7% and India declined 16.3%.
When asked to comment whether the board is pressuring Read to act swiftly, WPP said only that "bringing together AKQA and Grey is in line with our strategy outlined in 2018 – and driven by the executive team – to create fewer, stronger agency brands that offer outstanding creativity allied with technology expertise. It follows other successful mergers including Wunderman Thompson, VMLY&R and BCW which are among WPP’s strongest-performing companies."
Some people are betting on the mergers, and Read’s overall strategy to strengthen both its creative and digital agencies by integrating them together. “Given Mark Read's background with Wunderman and the well-reported challenges of the holding companies, these moves, although appearing desperate to some, may be an effort to survive the competition of the more nimble indies,” says one former WPP exec.
As Ad Age earlier reported, independent agencies—boasting a more nimble and affordable model that can get work out the door faster—are becoming more of a threat to holding companies as they increasingly take their business.
“I wasn’t surprised to see Grey and AKQA combined together,” says Forrester Principal Analyst Jay Pattisall, adding that the merger of Geometry and VMLYR will bring critical commerce capabilities that clients are demanding in the pandemic to a digital player.
“This is just the continuation of a trend that started a few years ago with marketers really looking for streamlined solutions,” Pattisall says. “We see that campaigns perform much higher when [all disciplines] are integrated and leveraging each other.”
On AKQA and Grey, “the only thing that surprised me was how long it took,” he says.
The merger had, in fact, been suspected by most people in the ad world since the formation of VMLY&R and Wunderman Thompson. Many people thought the debut of GreyKQA or AKQGrey would be next. In some countries like Denmark, Grey and AKQA have already been sharing office space.
Though Read argued in an earlier interview with Ad Age that he didn’t want to create “a linguistic tongue twister” by combining the agency names, two people close to the matter say it was AKQA’s Ahmed, who was appointed CEO of the combined company, who refused to work under the name Grey.
“The original thinking was that Grey, being the bigger name, would absorb AKQA but Ajaz said ‘no way,’” says one exec. Since the WPP board was giving Read “an extremely hard time” to move ahead with the merger, says the exec, the Grey team led by Houston, now global president of AKQA, ended up caving.
WPP declined to comment on that report.
Still, while the decision may be the right one, it could cost Grey talent, like the ones P&G made clear it so "deeply values."
“These mergers, which are actually takeovers, make people extremely anxious and unhappy,” says one former WPP executive who worked across several of the holding company’s agencies including Grey New York. A Grey employee adds, “I don’t know any high-level creatives who aren’t considering going independent right now.”
Contributing: Jack Neff