The merger of MEC and Maxus is a big deal. WPP, their ultimate parent company, does not like killing its own brands. So the decision by its media buying arm, Group M, to merge two of its four global agency networks in an as-yet-unnamed "new co" is a sign of weakness, not strength.
Both agencies have been underperforming and losing big clients and have struggled to differentiate themselves on the global stage. Both over-index on local clients.
Beefing up Essence – the smart London-born digital agency that WPP bought in 2015 – and turning it into a fourth global media network makes sense. It has digital and data at its core and is different from the other Group M agencies.
But that shouldn’t distract from the questions raised by the MEC/Maxus merger.
For a start, it shows that building a new, global agency is difficult. There are few success stories from the last decade. If Maxus, which was founded in 2008, struggled despite having the backing of Group M, how much harder must it be for others?
Omnicom’s data-driven Hearts & Science network, which launched last year, got off to a flyer in the US but has stumbled in Europe after missing out in Procter & Gamble’s review. Essence will face its own challenges as it moves into traditional media and tries to scale up in more markets.
A bigger issue is whether advertisers feel the traditional media networks, with their reliance on trading scale, are still fit for purpose in the age of data-driven marketing.
Tim Castree, the new global chief executive of MEC, who will lead the "new co", doesn’t put it quite like that. But it was telling that he told Campaign, before news of the merger leaked, that the gap between where the agency is and where it needs to be is a lot wider than a lot of his staff realise.
A new report from MediaSense and ISBA, Media 2020: Refresh, makes clear that marketers are impatient for change as they are under pressure to drive digital transformation in their own companies.
They plan to use fewer agencies and to take greater control of their data by bringing it in-house. Brands are desperate for agility, simplicity and a more joined-up, strategic approach that goes far beyond marketing and takes in every part of their business.
When media agencies aren’t delivering, it’s no wonder that the big management consultants scent an opportunity to enter the market.
Merging MEC and Maxus should be just the start. Media agencies need to reinvent themselves.