Why VML is the big winner in its merger with Y&R
Depending who you ask, the merger of Young & Rubicam (Y&R) and VML, the first structural move by new WPP chief executive Mark Read since his reign was confirmed in September, was either a long time coming or a shock to the system (for some of those who recently joined the now consolidated agencies at least).
The rumour had been flying around since before Cannes that Y&R would integrate into another part of the group at some stage. Some speculated it would become part of Grey or even JWT. And while neither ended up being its bedfellow, the writing was on the wall for some time before this week’s announcement.
VML is very much seen as the winner in this merger. Its boss, Jon Cook, has been named as the global chief executive of the new entity, VMLY&R, while David Sable, the charismatic head of Y&R, initially takes on the more ceremonial role of non-executive chairman. He will, in time, step aside altogether into a yet-to-be-clarified position within WPP.
The Drum has been assured that Sable is seen as a major figure in the future of the overarching business, despite that lack of clarification into what his new role will entail or where he will sit. Read is believed to regard him as a pivotal ally and important friend to have.
In the UK, Y&R’s recently installed management team is believed to be in consultation, which will have come as a surprise when they were hoping to rebuild the 80 or so strong office into a new fighting force. It is understood that there were already plans for the business to leave the offices of Wunderman as part of that new dawn which we will now never see. At yesterday's all-hands meeting to announce the merger, staff from both agencies were told they would be moving onto the same floor together in Greater London House with immediate effect.
No one has commented on the structure of the London operation due to the consultancy situation having begun, but the outlook looks bleak for Y&R's new team before they have even had a chance to make their mark.
Jon Sharpe will be the chief executive of the new entity across Europe. His ascension comes exactly a year after he moved from Y&R to VML to become its European chief. That means uncertainty for Paul Lawson, who was persuaded to succeed Sharpe in the Y&R London hot seat after 13 years at Leo Burnett London. Lawson had also recently recruited managing director Katie Lee as the latest part of his building plans.
Word is that Amanda Farmer will stay as managing director, a continuation of the role she holds within VML. And Harsh Kapadia, the VML executive creative director who made the move from New York in February, will continue to lead the creative department in London.
Mark Roalfe, the co-founder and chairman of RKCR/YR, will also remain in some capacity. Andrew Dimitriou, the former European president of Y&R, will work with Sharpe on the integration of the two agencies across the continent. The outlook for London-based David Patton, who was global president of Y&R, is less clear.
In Asia, the merger will result in VML Southeast Asia chief executive Tripti Lochan and VML China chief executive Yi Chung Tay taking on the roles of co-CEO. Similar moves will continue to be implemented globally.
The news was revealed to the company chiefs over the weekend, it is understood. The combined business will employ a staff of 7,000 around the world.
In announcing his first major move as WPP chief executive, Mark Read said: “VMLY&R will be a powerful brand experience offering and a core agency brand for WPP. VML and Y&R have distinct and complementary strengths spanning creative, technology and data services that make them a perfect match. This is an important step as we build a new, simpler WPP that provides clients with a fully integrated offering and easy access to our wealth of talent and resources.”
The merger comes less than a month after Read told a WPP earnings call that the group needed to have "stronger creative agencies with stronger reputations".
VMLY&R, which he hopes will make good on that ambition, is set to be in operation early next year once teams have co-located and rebranded.
Steve Antoniewicz, head of The Drum Consulting, believes the challenge of integrating the two agencies between now and then may not be straightforward. He said: “Is this two good things together to make something great? These two are very different agencies and the supposed great fit and cultural common ground is unclear from the outside looking in. VML has been very successful of course but it seems like Y&R is being folded in.
“We always shorten unwieldy agency names so suspect this new entity will become known as simply VML quite quickly."
Young & Rubicam, established in Pennsylvania in 1923, was one of the world’s largest agencies, and so integration will take time. Although VML, founded in 1992, doesn't have the same heritage, it has successfully styled itself as one of a new breed of agencies adroit at operating across platforms – a must for today's CMOs. Its chief creative officer, Debbi Vandeven, was jury president of the Entertainment Lions at Cannes this year and its work for Absolut in South Africa, which saw it turn a fairly conventional digital brief into a music, fashion and art festival, is a prime example of its canny versatility.
While VML London has grown approximately 64% in headcount in the last year, reflecting the backing it has received from WPP, Y&R has been counting the cost of lost business in the UK capital. JD Williams and Royal British Legion took their advertising needs elsewhere and the BBC, once a prized client, has divested creative briefs as it funnels more work through its in-house agency. While Y&R remains officially under contract with the BBC until the new year, it does not anticipate that relationship continuing thereafter.
This goes some way to explaining why VML has emerged as the A-side in its consolidation with Y&R. Read, who lest we forget was long seen as WPP's transformation honcho before his elevation to its summit, will have been impressed by VML's ability to reinvent its offering at a time when clients are demanding exactly that from their agencies. He will hope its lead role in the new entity will reinvigorate the perception and performance of WPP's creative agencies which have garnered an "ailing" reputation, as one insider puts it.
What VML now has is more support and bandwidth to grow its own international footprint – and we have seen the first signs of Read’s vision of a more streamlined network for the future.
This won’t be the end of that consolidation either it’s fair to bet.
Words by Stephen Lepitak, Cameron Clarke & Olivia Atkins