Advertising giant WPP is merging its J Walter Thompson (JWT) and Wunderman agencies as the company attempts to streamline its complex business structure.
The deal to combine the two subsidiaries will create a new entity called Wunderman Thompson, which will have headquarters in New York and London.
The new company will employ roughly 20,000 people in 200 locations around the globe. Combined clients for Wunderman Thompson will include Bayer, HSBC and Pfizer.
Current chief executive of Wunderman Mel Edwards will lead the new firm, while JWT chief executive Tamara Ingram will be chairman.
WPP chief executive Mark Read said: “Wunderman Thompson is a formidable combination, bringing together the capabilities our clients are demanding – award-winning creativity alongside deep expertise in technology, data and commerce – in a single organisation.”
“It’s great news for our clients that we can combine the best of JWT and Wunderman in a single agency, and it’s great news for WPP as it allows us to compete more effectively in the sectors with the most significant opportunities for future growth,” he added.
The merger will mark the end of JWT, one of the world’s oldest advertising agencies, as an independent brand. Digital network Wunderman is one of the group’s strongest-performing agencies.
News of the merger comes as WPP looks to simplify its vast network of subsidiaries and improve efficiency amid increasing competition in the advertising industry. In September the company merged its VML and Y&R agencies.
Sarah Simon, senior analyst at Berenberg, said: “As we’ve seen with Publicis, there’s a need to break down silos between businesses as the agencies try to present clients with the best from their respective groups.
“While the individual businesses have their own profit and loss responsibilities, it’s hard to truly do that. If you fully merge the entities, however, you have a better shot at doing this.”
WPP recently announced a 1.5 per cent fall in its third quarter results as competition for contracts intensifies.
The advertising industry has faced disruption from digital marketing due to the impact of tech giants Facebook and Google. But analysts have also said that advertising holding agencies such as WPP need to simplify their complex corporate structures to counteract the squeeze on revenues.
WPP’s share price was up more than 2.5 per cent today following reports of the merger.
The company said it expects Wunderman Thompson to be fully operational early next year.