WPP gives birth to Wunderman Thompson after merger announced

WPP announces merger of two agencies as Wunderman Thompson

WPP CEO Mark Read announced the merger of traditional agency J. Walter Thompson and digital agency Wunderman under the name Wunderman Thompson.

This comes a couple of months after digital agency VML merged with traditional agency Y&R to form VMLY&R.

While these are positioned as mergers of equals, they are essentially a takeover by the digital agencies of their older siblings.

JWT’s demise is a metaphor of the demise of Madison Avenue. The 155-year-old firm is America’s first ad agency, founded as Carlton & Smith in 1864.

It was renamed J. Walter Thompson Co. when James Walter Thompson bought out Carlton, in 1878.

Forrester Research suggested recently that WPP should look to “dissolve its agency brands in order to meet the CMO’s need for simplicity, accountability, and scale,” thereby restructuring nearly 400 companies into just a few dozen units.

It also called for WPP to consolidate its 100 creative agencies within the seven global networks of AKQA, Grey, JWT, Ogilvy, VML, Wunderman, and Y&R.

WPP had folded its digital agency Possible into Wunderman, which was quickly followed with the merger of media agencies Maxus and MEC into Wavemaker.

Five of its design consultancies were consolidated into one agency called Superunion. And a couple of months ago Read brought together advertising agency Y&R with digital agency VML.

It has also merged its PR firms Burson-Marsteller and Cohn & Wolfe to create Burson Cohn & Wolfe.

Wunderman Thompson will employ approximately 20,000 people across 90 markets.

The advertising landscape has been upended by Facebook and Google, which devour the majority digital spending, as well as the emergence of new competition in the form of consultancies such as Accenture and Deloitte, which have moved into the space that the big ad holding companies, such as WPP, used to have to themselves.

The consolidation will allow agencies to compete more effectively in areas with the most opportunity for growth as agency labels become less important.