WPP’s ad-buying firm GroupM is consolidating two of its global media agencies, Maxus and MEC.
The merger has been made in efforts to trim down costs from office rental, IT services and staff count, although GroupM has set no specific targets. Savings, however, are likely to be channelled into expanding the digital ad agency Essence.
MEC, which was founded 15 years ago, has 127 offices and works with clients such as Vodafone, while Maxus, a nine-year-old agency, has 70 offices and clients including Barclays. Both agencies were recognised for work with these clients in April’s Performance Marketing Awards.
As reported by WSJ, the move to consolidate two high-profile agencies follows mounting pressure from advertisers cutting back on the number of agencies they work with in order to cut ad spend and associated agency fees.
“We operate in a very competitive sector in a very competitive marketplace, and we do have to find efficiencies so we can invest in areas that will give us longer-term growth,” said Kelly Clark, who was named GroupM’s global chief executive about eight months ago.
“My job is to allocate resources in areas that give us growth in a challenging environment.”
Those areas in question include Essence, a digital ad-buying agency bought by the holding group in 2015. GroupM plans to open Essence offices within six markets globally within the next “six to 12 months”, and already operates in the UK, US and Australia.
Following the merger – that will eventually combine Maxus and MEC under one name – GroupM will be left with three global ad-buying firms; Mindshare, Mediacom and the newly-merged group; the latter will lead by current CEO of MEC, Tim Castree, while Maxus’ former CEO will continue the recent move to GroupM’s chief transformation officer made last month.