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In-depth Mergers and Acquisitions GroupM

Why GroupM is making Essence the ‘fourth pillar’ of its media offering


By Ronan Shields, Digital Editor

June 2, 2017 | 4 min read

With the announcement that GroupM is to merge MEC and Maxus, along with the expansion of its digital specialist agency Essence, The Drum caught up with Essence chief executive Christian Juhl, for further insight behind the decision.

Essence will now be the flagship of GroupM's digital offering

Citing a “competitive landscape” WPP’s GroupM’s leadership will combine 15-year-old MEC with nine-year-old Maxus, in a move that will cut back on office space, IT and headcount – although it has yet to offer no targets when it comes to job cuts, etc.

Essence has been heralded as “a new fourth pillar for GroupM” (the other entities within the group include MediaCom, Mindshare, as well as the recently formed [m]Platform), by advertising industry analyst Brian Wieser of Pivotal Research.

Wieser’s assessment went on to highlight some of the headwinds those in the wider network agency landscape are now facing. Chief among these include: ”The presence of zero-based budgeting and/or the fear of activist investors who might push marketers to reduce costs loom large as facts of life for agencies.”

Add to this the “commoditization of services," the ongoing issue of “media contract transparency issues” (along with the looming threat of brands in-housing programmatic media buying) and that “most global media agency networks [are] indistinguishable to all but the most seasoned of practitioners,” according to Wieser’s assessment.

However, speaking with The Drum, Essence chief executive Christian Juhl, said it was the new unit’s “mastery of granular level data, strong emphasis on analytics, and the ability to optimize all media types” that will help distinguish it in the contemporary media landscape.

“It’s hard for many agencies to make the ‘digital first’ transition,” he said, articulating the rationale for the recent move.

He went on to add: "There’s are lot of folks out there from agencies that have come out with digital-first as a moniker but they haven’t backed it up with a single agency to truly have digital DNA in advertising."

Describing Essence as "unique within the industry", Juhl went on to say: "I think the ability to use platforms to gain access to extract granular-level data and understand performance is unique, and that’s at the heart of every marketer’s wish list by now… a lot of folks liken us to a consulting, software-type organization rather than an agency.”

Essence’s line-up of clients includes some of the industry’s biggest brand names of the digital era, most high-profile among them is Google, and according to Juhl it was his outfit’s ability to persuade such premium clients to buy into adtech, such as private marketplaces, that made it stand out.

Following its acquisition by WPP’s media investment arm GroupM, the business has been positioned as one its foremost assets – a tactic born of Sir Martin Sorrell’s much feted ‘technology, data and content’ strategy – and post the merger it hopes to add creative to its bow.

This year alone, Essence is poised to spend over $1bn on media and 70% of this will be spent using adtech with Juhl adding that it will take the same approach of using “using data, measurement and technology” to integrated technology.

“By combining some of these assets and clients, we’ll have a really strong approach to the integrated media marketplace and be the same strong force for change in media that we were in programmatic and digital,” adds Juhl.

It has yet to be confirmed which clients, as well as staff members, will be working on the newly formed Essence offering. “Obviously all of those discussions are ongoing to discuss what we can do jointly together,” adds Juhl.

The GroupM reorganization reflects similar across the agency landscape, with Publicis Groupe announcing the merger of Razorfish and SapientNitro to form a new entity called SapientRazorfish late last year in order to better serve client demands.

Aside from this, management consultancies are also attempting to get in on the media game, and earlier this week it emerged that Deloitte had acquired creative shop Market Gravity, with network group also facing a tussle when it comes to talent.

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