By Emily Steel
Advertising giant WPP PLC is preparing to unveil a new interactive ad agency network called Possible Worldwide, part of a broader push to reposition its business to tap global growth in digital ad dollars.
The network will stitch together four digital ad agencies that WPP has acquired since 2005—New York-based Schematic, Cincinnati-based Bridge Worldwide, Singapore-based Blue Interactive and New Delhi-based Quasar —creating an organization that will have roughly 1,000 employees in 18 offices around the globe.
The combination is an attempt to catapult the four shops onto a level where they can better compete for global work against the industry's largest agencies, such as Publicis Groupe /zigman2/quotes/207669560/delayed FR:PUB -1.86% SA's Digitas and Razorfish digital ad firms.
"We see the digital business becoming more complex not only from a technical point of view but also from a geographic point of view. It is important to bring these businesses together to build another strong global network," said WPP Chief Executive Sir Martin Sorrell .
The advertising business has changed dramatically in recent years as marketers, such as Procter & Gamble /zigman2/quotes/202894679/composite PG -6.23% Co. and AT&T /zigman2/quotes/203165245/composite T -1.65% Inc., shift increasing portions of their budgets to digital outlets, like the Internet and mobile services, from traditional media, such as TV and print. At the same time, marketers are accelerating their global ad buying. The transition is leaving advertising companies constantly experimenting with new approaches to organize their agencies.
Digital ad agencies cropped up in the mid-1990s, largely specializing in building websites and designing online ads. The shops expanded their expertise to help marketers navigate new technologies as they emerged, such as search and social networking.
Ad holding companies snapped up a series of these agencies and tested various approaches for organizing them, such as aligning the digital shops with their traditional agencies or having them operate independently. Meanwhile, traditional ad agencies also started offering digital services.
Increasingly, digital agency executives say that in order to compete for advertising accounts, they need to operate on a broad, global scale.
"There's so much turmoil right now, the agency landscape is changing," said Trevor Kaufman , the soon-to-be installed CEO of Possible Worldwide and previous Schematic chief. "Digital agencies are most effective when they are not one-office boutiques, but larger and global."
Ad executives say that the scale of their agencies is becoming even more important as marketers start assigning global duties and lead creative control of their accounts to digital shops.
Razorfish, for instance, recently landed several new accounts where it is handling the lead creative role for companies including travel website Travelocity and tech giant Intel /zigman2/quotes/203649727/composite INTC -4.62% Corp. Razorfish has about 2,200 employees with 21 offices around the world.
"The role of digital agencies is morphing more now than it has and faster than ever before," says Razorfish CEO Bob Lord . "Unless you know technology today, you're not going to do great creative."
will link agencies Schematic, Bridge Worldwide, Blue Interactive and Quasar
will have 1,000 employees and 18 offices around the world
practice areas will include mobile, Web, social media and television
key accounts will include AT&T, Comcast, Dell, Google, P&G, Microsoft and Target
The idea to create WPP's Possible Worldwide came about last year when the heads of the four WPP agencies met to figure out how to best grow their businesses. The executives decided that they could be more effective combining their expertise and competing globally in areas ranging from technical skills for search marketing and Web design to creative expertise to build innovative new campaigns for online video, social media and digital billboards.
Possible Worldwide launches with a number of key accounts from the four agencies, including AT&T, P&G, Mazda Motor /zigman2/quotes/202894679/composite PG -6.23% Corp. and Starwood Hotels & Resorts Worldwide Inc. Possible Worldwide is expected to have about $100 million in annual revenue this year, Sir Martin said.
To be sure, the new network is likely to face challenges in integrating four disparate agencies with separate cultures and entrepreneurs at the helm. At the same time, traditional ad agencies are rapidly boosting their expertise in the digital sector and are likely to prove to be a tough competitor for the digital-based shops.
"The best practices in digital tend to spread, whether through hiring people away or hearing about it. It is not easy for these guys to differentiate themselves," says James Dix , an analyst with Wedbush Securities.
Write to Emily Steel at firstname.lastname@example.org