WPP Group has taken a 20% stake in Globant, a fast growing Latin American marketing and software development firm.
Buenos Aires-based Globant blends engineering and design-driven driven approaches. It employs 2,700 in six countries -- including Brazil, Argentina, and Columbia -- and offers its clients software development, data architecture, e-commerce applications, design, and mobile development services. American Express, LinkedIn, and Google are among its customers.
The $70 million investment, which closed on Dec 27, reinforces WPP's long-stated determination to grow through technology M&A. It has said it wants digital revenues to reach 35+ percent of total revenues by 2016. But the deal is unique in that it represents a significant departure from what we think of as "marketing."
WPP's technology investments -- from the purchase of 24/7 Media in 2007 right up through last summer's acquisition of ad tech consultant Acceleration -- have tended to focus on digital media planning and buying. However Globant doesn't offer media services, digital or otherwise. That could be read as sign of WPP 's interest in diversifying its "marketing tech" holdings, as well as a desire to get into big software development projects that may only partially overlap with marketing. (projects such as corporate intranets, visualization of business data, and other areas not traditionally within the purview of the ad business.)
If that seems to put WPP into competition with large technology consultants such as Deloitte and Accenture, that's probably because it does.
As WPP CEO Sir Martin Sorrell put it in a statement today, “Increasingly, clients want better coordination between their IT departments and their marketing departments, between their Chief Information Officers and their Chief Marketing Officers. There are many consulting companies or digital agencies that are expert in one function or the other. Few, if any, do both and even fewer can integrate deep technical and creative capabilities on a global scale as Globant does."
In part this deal is also about preparing for a big Latin American decade, as Brazil plays host to two global sporting events: the FIFA World Cup in 2014 and the 2016 Olympics in Rio.
Globant's net revenues for 2011 were $90 million and $57 million for the six months of 2012 2012. The $70 million WPP is pumping into it values the company at $350 million.