WPP's GroupM announced its decision to purchase Essence this week, with much of the industry reaction focusing on the well documented friction between the holding group and its new acquisition's biggest client Google. Rob Norman, GroupM's chief digital officer, speaks to The Drum about how the purchase makes more sense than it would first appear.
GroupM announced its purchase of digital media agency Essence this week, with the London-based outfit spending more than $700m on adspend each year counting Google and Visa among its largest clients.
Essence will continue operating as an independent brand, but with the advantage of access to GroupM's global reach and infrastructure, alongside outfits such as Mindshare, MediaCom which it will collaborate with under the terms of the deal.
Financial details of the acquisition were not discussed, although industry observers raised question marks over the fact that WPP - GroupM's parent company - is frequently critical of Google over a number of issues, including its dominance of the digital media business, and transparency. How would this dynamic play out given that Google is Essence's biggest client?
GroupM's chief digital officer told The Drum a key rationale behind the purchase of Essence was its expertise with Google's ad tech stack DoubleClick, which adds to its expertise of rival digital media stacks such as AppNexus (WPP owns a 15 per cent stake in AppNexus, another vocal critic of Google).
"We do a lot of work with AppNexus, The Trade Desk, and many others.. and if you are going to win at the intersection of data, media and tech, then you need a meta-structure in place," he said. Norman went on to explain that GroupM Connect - led by chief executive Ruud Wanck - was formed earlier this year partly to improve the holding company's credentials in the different ad tech ecosystems.
The aim of this entity was to leverage GroupM's scale to optimise its data, operations and technology across all real-time and biddable media, and the knowledge that Essence has of using Google's DoubleClick ecosystem is a key advantage in this strategy according to Norman.
"If you want to buy Amazon, you have to use Amazon, and likewise with DoubleClick if you want to buy Google," he added. Norman went on to state that another key reason behind the purchase of Essence was its position as a core test partner with Google's ad products.
"Google has the expectation that Essence will be a beta-partner for new [advertising] products," he said.
"So hopefully this will put to bed the whole 'frenemy' notion between ourselves and Google. A lot of people forget that we are Google's biggest client [in terms of media spend]."
Sources close to the deal claim Google was kept aware of the negotiations in the run-up to the announcement of the deal, and that Essence's largest client gave its full blessing to the takeover.