GroupM Buys Essence – And A Lot Of Google Expertise

groupm essenceGroupM hopes its purchase of digital/media agency Essence on Wednesday (for undisclosed terms) will add a whole lot of Google expertise into WPP’s cluster of media agencies.

After all, the formerly independent Essence is Google’s digital agency of record.

“Google, as you might imagine, is keen on its global digital agency using the full set of Google tools to deliver its advertising,” said GroupM Chief Digital Officer Rob Norman. “As a consequence, they use Essence as a power user of the Google stack, and they also use Essence to beta new features, whether it’s in their services or their programmatic bidding products.”

And Norman expects Essence’s relationship with Google to continue, noting GroupM had “extensive conversations” with Google’s senior execs throughout the acquisition process.

“It would have been a rather odd transaction to do if we didn’t have full confidence that the Google relationship would be retained and prosper,” Norman said.


GroupM had been poking around Essence off and on for about two years. The situation accelerated in January at CES, however, when Norman and GroupM EMEA CEO Dominic Grainger had a dinner meeting with Essence Global CEO Christian Juhl and its co-founder, Andrew Shebbeare.

Essence had been looking for an acquirer in a bid to access new markets quickly, and because it was getting requests from clients to push into offline areas like addressable television and digital out-of-home.

“They knew we had the resources and assets to do that,” Norman said. “They also wanted help with talent recruitment. Having an HR infrastructure on the ground in 100 countries is pretty useful to them.”

Essence will operate independently within the GroupM umbrella, Norman said. That unit also includes agencies Mindshare, MEC, Maxus, MediaCom and the programmatic trading desk/tech company Xaxis. GroupM, he added, doesn’t intend to mess with Essence’s current operating model.

“Why would we seek to screw it up, as if we’d know better than them?” Norman said. “Also, they’re on an earnout over a period of time. They get part of the money now and part of the money over the next few years. They’re responsible for their own operating model and success. It’s not up to us to pluck hairs out of their nostrils and tell them they can’t do this or that.”

Essence has 500 employees and manages about $700 million in media spend. Read the release.

The acquisition comes two days after the departure of GroupM North America CEO Kelly Clark. GroupM Global CEO Irwin Gotlieb said in a statement: "Kelly will be transitioning to a new role with GroupM which stems from a personal decision about what he wanted for his life and career.”

Updated with comments from Essence Global CEO Christian Juhl:

AdExchanger: GroupM’s Rob Norman alluded to Essence’s desire to grow. Can you expand on that?

CHRISTIAN JUHL: Geographically, we continue to get client pressure to expand further into APAC, further into EMEA as well as covering Latin America. There’s a tremendous amount of pressure to start supporting local regions of global clients.

How about expansion in terms of technical capabilities?

Essence has three big specialties around creating media, the data science practice, and the creative practice. Within the creative practice, we’ve taken great leaps forward in dynamic creative – API-driven container ads that can surface contextual formats in a variety of formats. That includes digital out-of-home, branded experiences, and display ads.

There’s tremendous scale behind that to have a group living between big idea creative and basic ad creation. Linking those areas together at full scale is a huge opportunity for us.

We have aspirations to be one of the truly digital first, digital native integrated global media networks within GroupM. We’ll need to invest in things like communications planners, media planners and people with a variety of experiences.

GroupM has a lot of data assets. Will that affect what Essence can do?

Essence already pulls terabytes of data every day and does a tremendous amount of data processing on behalf of our clients. We’ll certainly look at what GroupM has available, and there are probably some agreements and areas where we can provide further scale. But I consider us one of the leading agencies in that space already.

Essence obviously has a lot of Google expertise. To what extent will other GroupM agencies be able to tap into that?

The unique qualities that makes our agency what it is will continue to reside with us. As part of GroupM, we’ll lend our expertise where it’s required. Whether it’s our knowledge of GDN or YouTube, or our incredible data science department or the way we think about analytics.

What were the questions or concerns Essence had prior to agreeing to the acquisition?

We wanted to maintain an independent, digital-first culture. We had much more favorable attrition rates than what’s normally seen in the industry. I think that’s because of the people we recruit and how we mentor them. So we wanted someone who can really respect how unique our culture is. And we spent the last couple of years building a very mature global management team. So we wanted someone who’d allow us to operate every single global entity.

There were some real tactical things in terms of benefits, office space and IT packages. Those are all disruptive to day-to-day employees. We want to focus on the work and we don’t want to get bogged down in the minor details.

On the flip side, we were hoping to gain additional scale, which we clearly found. We wanted access to bigger data agreements and partnerships, and access to really great research.

How many other suitors did Essence have?

We talked to a wide variety of parties over the last year.

What was Google’s reaction when it heard you were looking to be acquired?

We’d been talking with Google through this, from the very beginning. Google supports our growth and has been an incredible partner. They continue to be supportive of our overall plans in how we’ll grow with them, lead in the digital marketplace, and use them as a reference case for what can and should be done in the Google environment.

 

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