Agency shotgun marriages of 2020
The consolidation trend showed no signs of slowing in 2020 as agencies adapted to the disruption of the pandemic. With holding companies reducing their agency brands—in some cases mashing names together to create new alphabet-soup brands and, in other cases, getting rid of legacy monikers altogether—analysts predict there's no end in sight to these merge-and-purge activities.
“The marketing and procurement worlds, now more than ever, are looking for greater efficiencies from their agency partners and are trying to do more with fewer agencies,” R3 Co-founder and Principal Greg Paull commented in a recent Ad Age story. “This process is only going to gain traction in a post-COVID world as complexities need to be smoothed over.”
AKQGrey, or something like that
WPP sparked a great deal of confusion when it announced its merger of Grey and AKQA in November, becoming arguably the most talked-about mashup of 2020. Reports that the Grey name would be retired riled employees as well as key client P&G, which demanded reassurance from the holding company that the name would live on in certain markets for certain clients.
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, WPP said. That prompted reports including in Ad Age that said the Grey brand would eventually be dropped (See also the Most Head-Scratching Name Changes of 2020).
The merger in itself was not all that surprising. It continues WPP CEO Mark Read's charge on combining the creative expertise of legacy agencies with the digital savviness of younger shops including AKQA or VML. And AKQA and Grey had already been working closer together, even sharing office space in certain countries including Denmark. What did shock some was the disposition of the 103-year-old Grey name, which one of the agency's executives told Ad Age caused "chaos" internally. "Grey people are furious and resisted completely," noted another executive close to the business.
A new Geometry
WPP didn't stop its purge at AKQA-Grey this year. Following that merger announcement, the holding company said it would be folding commerce shop Geometry into VMLY&R. The new arm, bringing critical commerce capabilities to the creative digital network, would be branded going forward as VMLY&R Commerce, an 11,000-person company. Geometry Global CEO Beth Ann Kaminkow continues as the global chief executive of the new agency.
One Dentsu, one massive restructuring
If you thought VMLY&R was a mouthful, get a load of this mashup: Dentsu Mcgarrybowen, formed in May from the integration of Dentsu International creative, content, design and experience shops Mcgarrybowen, Dentsu, Isobar and John Brown. Led by Global Co-Presidents Merlee Jayme and Jon Dupuis, Dentsu Mcgarrybowen didn't dismantle the agency brands it absorbed like Isobar or John Brown—not yet anyway.
On its continued push to become a more integrated collective, One Dentsu, Dentsu International—which itself was rebranded this year from Dentsu Aegis Network, Dentsu Group's international agency business—is undergoing a restructuring that will see the reduction of its agency brands from 160 to just six in 2021. It's not known yet which brands are going to be ditched but, regardless, the holding company does expect to cut 6,000 jobs in the process.
Like bundling your TV, internet and home phone, MDC Partners now offers clients all their marketing needs in nice, neat packages through its "agency clusters." The holding company started bundling its agencies into networks last year, allowing them to share resources from one another when needed but still act independently of each other, depending on client needs. In February, MDC unveiled its latest cluster: Constellation, comprised of creative agencies 72andSunny and Crispin Porter Bogusky; digital brand and experience shop Instrument; strategy and design firm Redscout, and production shop Hecho Studios.
That creation followed the formation in January of Alliance, the Anomaly-led group that houses digital innovation shop Y Media Labs; design and branding agency Mono; consumer marketing communications, PR and digital firm Hunter; creative experiences shop Relevent, and healthcare agency Concentric Health Experience.
In December 2019, MDC formed the Doner-led network that includes PR firm Veritas; shopper marketing agency 6Degrees Integrated Communications; brand and ad shop Yamamoto; creative, technology and media agency Union; brand strategy and digital PR firm KWT Global, and luxury and lifestyle PR agency HL Group. It also combined its media, data and technology agencies under one network in July 2019, as Adweek reported. That shift saw the merging of its data, technology, CRM and addressable content agency, Gale, with MDC Media Partners agencies Allegory, Attention, EnPlay, Trade X Partners, Unique Influence and Assembly. Media trading consultancy Varick also joined that network, according to Adweek.
The clusters aren't the only consolidation moves MDC Partners CEO-Chairman Mark Penn has up his sleeve. In June, The Stagwell Group, MDC's largest shareholder and the firm where Penn also serves as managing partner and president, proposed a merger in which MDC would buy Stagwell’s agencies by issuing more MDC stock. The deal will form a $2 billion agency group, though not much more is known yet of Penn's plans for the combined company.
Penn has led MDC Partners as CEO since March 2019 after Stagwell, which he leads as managing partner, invested $100 million in the holding company. Penn formed Stagwell in 2015 as a holding company that would focus on advertising, research, data analytics, PR and digital marketing companies. Its holdings include Code and Theory, FINN Partners and ForwardPMX.
Independents get dependent
Holding companies aren't the only ones shrinking. Independents are also in decline as an increasing number of small shops themselves merged this year. Examples of these mergers include music strategy shop Premier Music Group and Search Party, a music supervision firm founded by Randall Poster in 2004; Dublin-based tech services company Keywords Studios and Hollywood creative shop Gnet; Minneapolis-based commerce agency The Stable and Arkansas-based e-commerce shop RichContext; and Amsterdam-based digital agency Dept and San Diego-based digital branding and experience shop Basic.