WPP's GroupM has sold its sponsorship consultancy practice, IEG, to Engine Shop, a fast-growing sports and entertainment agency.
While there has been speculation that WPP will pare some of its assets in the wake of the April departure of founder Martin Sorrell, the IEG deal has been in the works since late last year. People familiar with the matter say it is unrelated to any new strategic course.
WPP and Engine Shop did not disclose financial terms of the deal.
Founded in 1982, IEG is known for its research, including evaluating how much sports and entertainment sponsorships are worth to brands and so-called rights holders, which include properties like teams, leagues and music festivals that sell sponsorships. IEG runs an annual conference in Chicago that attracts major sports and entertainment industry players. It also has a subscription-based content arm that publishes widely cited reports such as the top spending sponsors in the major pro sports leagues.
"IEG's proprietary sponsorship valuation services and platforms have made lifestyle brands smarter for more than three decades," Engine Shop CEO Brian Gordon said in a statement. "We are going to build on them and create even more innovative and customized valuation tools that help marketers make the best decisions for their sponsorship investments and programming."
WPP acquired Chicago-based IEG in 2006. In 2015, GroupM folded IEG within a new offering called ESP, whose businesses included consulting to brands right holders, and selling sponsorships on behalf of rights holders. Engine Shop does not plan to get into the sponsorship-selling business. Instead, the agency will focus on consulting. It will keep IEG as an autonomous affiliate, headquartered in Chicago.
The deal means WPP will end the ESP brand in the U.S., but it will keep it alive in select international markets, David Grabert, GroupM's global head of marketing and communications. "Engine Shop's acquisition of IEG and the U.S. consulting practice of ESP will help them expand their portfolio of capabilities and it furthers GroupM's strategy pursuing sports opportunities in local markets with specialized agencies and partners," he stated in an email. He added that WPP will continue to service rights holders through Two Circles, a London-based sports agency it aquired in 2015.
WPP will still have a stake in IEG because it's an investor in Bruin Sports Capital, which owns Engine Shop. Bruin was founded in 2015 by George Pyne, former president of IMG Sports and Entertainment. Before that, he was chief operating office of Nascar. Bruin's holdings also include On Location Experiences, a premium hospitality business; Courtside Ventures, an early-stage venture capital fund focused on technology and media in sports; and deltatre, an international sports media and technology business.
Engine Shop's clients include Mercedes-Benz USA, Anheuser-Busch InBev, Johnson & Johnson, Under Armour, Major League Soccer and the National Hockey League. The shop's offerings extend well beyond event activations, including branded content, digital strategy, influencer marketing, measurement and more.
The IEG acquisition comes as brands demand more out of their sponsorships. Rather than getting simple awareness via signage, for instance, brands want more access to content and fan experiences that only teams and leagues can provide.
Engine Shop was attracted to IEG because it's sponsorship valuation data is considered the gold standard, trusted by brands and rights holders, Gordon said in an interview. But "it has the ability to even be a better business" he says, because there are more things to measure now than ever before. For instance, brands are trying to figure out how to value esports sponsorships, he says.
With IEG under its wing, Engine Shop aims to offer a one-stop shop for brands, consulting on what sponsorships they should pursue, as well as how to execute and measure them, Gordon says. "If you've got agencies that are really focused only on the front-end consultancy and then hand that off to a sponsorship activation agency, you don't have maximum efficiency— it's impossible," he says.
Engine Shop also plans to invest more in IEG's content and conference business, potentially adding more events. IEG's flagship Chicago conference drew 1,200 people this year across four days in April. Gordon says Engine Shop has not decided if it will keep the event in Chicago.
IEG's content arm, now housed at sponsorship.com, will be rebranded as IEGWorld. "We are going to be looking at utilizing digital and social channels more than they ever did and distributing more content more often," Gordon says.
The IEG deal follows a string of acquisitions by Engine Shop. The agency in May bought the esports and soccer divisions of SA Studios Global, making Engine Shop the U.S. agency for Umbro and lead shop for eMLS, the soccer league's competitive "FIFA 18" video game league. In February, Engine Shop acquired T Burns Sports Group, whose founder Terrence Burns is known for his work as an Olympic bid consultant. Late last year Engine Shop acquired The Gamer Agency, an esports strategy, event production and development company.