Mr. Droga -- the Aussie founder of the shop and one of the
industry's most respected minds -- has been gradually handing more
responsibility to others. In April, he made Sarah Thompson CEO of
Droga5, New York. But in a statement today the two companies said
Droga5's agency management will stay intact.
It's not the first time Droga5 has sought outside investment. In
a smaller deal last year, the agency received an infusion from a
private investor group led by Apollo Global Management's Henry
Silverman and Clear Channel CEO Bob Pittman. They are understood to
Since then, Mr. Droga has been seeking more funds. Multiple
industry executives say the shop, which has offices in New York,
London and Sydney, has talked with potential buyers in recent
months, but price has been an obstacle.
Droga5 was advised by Kirkland & Ellis in the U.S. and
Clayton Utz in Australia. WME was advised by Paul, Weiss, Rifkind,
Wharton & Garrison in the U.S. and Corrs Chamber Westgarth in
One industry exec estimated WME's investment is around $150
million, which would be steep considering that in recent years,
most sales in adland have been digital, mobile and data-marketing
companies. In contrast, Droga5 has essentially been a highly
admired and innovative traditional shop. It's a regular on the
awards circuit and performed well at last month's Cannes
International Festival of Creativity.
"Droga5 has always endeavored to be the most influential
creative agency in the business, with ideas that move our clients
and our industry forward," Mr. Droga said in a statement. "This
partnership will exponentially accelerate our ability to realize
that ambition." The agency hopes the tie-up will expand its access
to WME's relationships in entertainment.
In its seven years, Droga5 has consistently churned out great
creative work. And it has gone from doing mostly pro bono campaigns
for charities to working for big multinational marketers. It works
with Spotify, Coca-Cola, American Express,
Mondelez, Hennessy and Prudential; it recently added Google-owned
The agency has also collaborated with Hollywood and the music
industry; it's worked with comedian Sarah Silverman on the
political campaign "The Great Schlep" and partnered with
Microsoft's Bing for work linked to Jay-Z's autobiography.
For WME, the lure of the deal could be increased competition
with CAA, whose marketing
arm has been lauded for its creative chops. The CAA unit was
responsible for Chipotle's ballyhooed "Back to the Start"
Mr. Emanuel, co-CEO of WME and founding partner of Endeavor
(which merged with William Morris in 2009), is known for his
outsize personality. He's widely considered the inspiration for the
Ari Gold character in "Entourage." His brother is Rahm Emanuel, the
equally vigorous mayor of Chicago.
"Droga5 is best-in-class across the board -- from its management
to its creative output," Mr. Emanuel said in a joint statement with
WME co-CEO Patrick Whitesell. Through this investment, we will be
able to join the best artists and storytellers from all
WME -- which is backed by Silicon Valley private-equity firm
Silver Lake Partners -- has worked with marketing agencies before.
It was a unit of Interpublic Group of Cos. until 2001, when it was
sold back to WME execs. And a couple years ago, it formed a
partnership with former Omnicom Group Vice Chairman Michael
Birkin's marketing venture, Red Peak Group. In recent years, it has
focused on strategic investments in social media, social gaming and