Sir Martin Sorrell’s advertising group, WPP, has announced that it has agreed to acquire a majority stake in Essence, the global digital agency and the world’s largest independent buyer of digital media.
Essence, whose clients include the Financial Times, Google, HP and Tesco Mobile, will continue to operate as an independent brand within WPP and GroupM, WPP’s global media investment management division.
Founded in 2005 in London, with offices in New York, San Francisco, Seattle, Singapore and Tokyo, Essence employs 500 people and deploys campaigns in more than 70 markets, managing media spend of over $700 million.
Commenting on the deal, Results International’s Julie Langley said WPP has been the most active buyer in the marcomms space over the past couple of years – with nine transactions in Q1-3 2015 alone.
“The company has long been consolidating its media buying and is now doing the same for digital and programmatic,” she said. “From this perspective there may not appear to be anything surprising about the rumoured acquisition of Essence.
“However, on closer examination it becomes clear that a deal would actually break the mould on WPP’s acquisition strategy.
“WPP tends to have a very disciplined approach to valuation, which means it doesn’t often win in competitive processes for stand-out, high-growth businesses. Essence however is a fast-growing company, with 500 staff doing digital and programmatic buying across multiple geographies.
“It is reported to be Google’s main global digital agency – one can imagine there was a lot of interest in the business. WPP must see sufficient strategic imperative to warrant a strategic price – likely down to a combination of the Google relationship and keeping that business out of the hands of competitors.”
WPP said the acquisition continues its strategy of investing in fast growth markets, new media and digital, including data and the application of technology.
WPP’s digital revenues were US$6.9 billion in 2014, representing 36% of the Group’s total revenues.
