Why WPP's GroupM Is Buying Media Agency Essence Digital
Essence is built on a transparent buying model and touts a custom planning and campaign management system called Olive that supports most of the global digital media buying for its largest client, Google.
Essence will join the GroupM media agency network, which houses four agencies, including MediaCom, Mindshare, Maxus and MEC, as well as digital buying group Xaxis, and remain independent within the network. Essence's Global CEO Christian Juhl will join the executive committee within GroupM reporting into Chief Digital Officer Rob Norman.
WPP has been in talks with Essence for two years, said Mr. Norman. Ultimately, it came down to the shop's digital buying foundation, its 500 staffers and its global buying technology. "They operate more consistently in more places than any other marketing services company I've come across," said Mr. Norman of Olive. The fact that Olive does it for Google across the world was another major selling point for GroupM, which is known for its contentious relationship with the search giant, according to Mr. Norman.
"What we've got is a power user of [Doubleclick bid manager] in the group, which we didn't have before," said Mr. Norman. "We wanted expertise on the Google stack, which complements our existing strategy of building a vendor-agnostic overall stack." GroupM company currently works with preferred vendors, including WPP-backed AppNexus and The Trade Desk. "Now [the ad world] can't look at us and say we have an adversarial relationship with Google." Mr. Norman also is hoping the relationship will give the group, through Essence, access to Google products in beta, he said. "It closes the suite."
The shop also brings a transparent buying model into GroupM, which is perhaps best known for a very different model.
GroupM trading desk Xaxis arbitrages media, meaning it takes ownership of media and sells it back to its clients bundled with data and analytics used to target specific audiences. Clients often sign non-disclosure agreements waving their rights to digital inventory pricing information.
This kind of buying and selling has been at the center of an ongoing debate among holding companies and marketers around the necessity of transparency in the buying model, and the role of the agency.
Other holding companies claim that they never take ownership of the inventory when they buy it on behalf of clients. Rather, they act as agents buying on behalf of clients, and claim that they're transparent on pricing information.
Last year, GroupM also launched a more flexible alternative to the arbitrage model for clients who were uncomfortable with the non-disclosure contracts. Essence, known for its transparent pricing model, will help legitimate that transparent programmatic alternative for the WPP network.
For Essence, it means an extension of its global network and a push toward a more diverse client base.
Mr. Juhl joined 10-year-old Essence as U.S. CEO, based in San Francisco, in 2013. More recently, its founders last May appointed him global CEO, moving the top role from the U.K. Under Mr. Juhl, Essence grew from $58 million in 2013 to more than $80 million in 2014. The shop, which has offices in the U.K., U.S. and Singapore, has been working to diversify its client base, dominated by Google, to include Method Home, EA Sports, Netflix, Viking Cruises and DoubleDown Interactive.
Ad Age named Essence an agency to watch in its annual A-List package in January.