The consolidation of Canada's advertising industry under the ownership of sprawling multinational holding companies continued Wednesday as Tokyo-based Dentsu Aegis Network Ltd. announced that it has bought Toronto-based Grip Ltd.
The 150-person agency, founded in 2002, will help Dentsu Aegis to expand its presence in Canada. The network currently owns media buying and planning agencies such as Carat and Vizeum and digital agency 360i, and in 2012, it bought Montreal-based ad agency Bos to create DentsuBos. Grip will not be subsumed into that agency, but will operate as a distinct shop, the company said. Terms of the deal were not disclosed.
Dentsu began an internal review before the purchase of Bos, to analyze how to expand its presence in Canada. Bos gave the company more knowledge of the francophone market, and Grip now provides further operations focusing on creative-advertising development, as well as digital and "branded content" work – in other words, advertising that seeks to be entertaining enough for people to sit through voluntarily.
"Grip has invested in better understanding the role of content beyond the 30-second spot," said Dentsu Aegis Network Canada chief executive officer Annette Warring.
For example, in 2013, Grip won awards at the Cannes advertising festival for a feature-length movie it created for Labatt Brewing Co. Ltd. beer brand Kokanee. The buddy comedy, called The Movie Out Here, was actually released on roughly 30 screens in British Columbia, Alberta, Saskatchewan and Manitoba. Moreover, it resulted in a jump in Kokanee's market share in Western Canada.
Roughly three years ago, Grip began considering its growth options, including opening offices in other countries. It began speaking with Dentsu in the summer. The deal means that the agency has access to media buying and planning within the network, which it did not have as an independent. It also means Grip will likely begin drawing up those expansion plans in the near future, looking at the United States as a possible market.
The deal is another in a string of recent acquisitions. Last year, Tokyo-based Hakuhodo DY Holdings purchased Montreal-based ad agency Sid Lee; Quebec City-based Vision7 International, owner of ad agency Cossette, sold an 85-per-cent stake to Chinese public relations giant BlueFocus Communications Group for $210-million (U.S.) in December, 2014; The U.K.'s WPP PLC bought Toronto's Taxi Communications in 2010 and John St. in 2013. Those moves followed waves of consolidation that began back in the 1960s and 70s, and went on to swallow up formerly prominent Canadian agencies such as Goodis Goldberg Soren; Vickers & Benson; and MacLaren Advertising.
But recently, all has not been well for the multinationals in the Canadian market. Last year, New York-based Interpublic Group said it was shutting down Toronto agency Lowe Roche; and WPP shuttered Young & Rubicam in Toronto after nearly 80 years in business.
"The recent acquisitions, as well as the shops that have closed down, is a symptom of how global holding companies are thinking about their own organizations. I think they're struggling to figure out what will work for them," Ms. Warring said. "It's a critical time in the industry. A different model is required. … Clients need faster response, they need plans with media [planning and buying], creative [advertising] and content all working together. The world is changing so quickly. … It's not that clients are asking for a one-stop shop; they want results. We're manoeuvring ourselves to accommodate that."
Dentsu is still in the market for possible further acquisitions in Canada.
"Areas such as experiential [marketing based on experiences, not just traditional ads], CRM [customer relationship management, or communications with customers] and data analytics are still capabilities we're developing," Ms. Warring said.
Grip's leadership team will remain at the agency. Such deals often include a guarantee that founders will stay on for a certain number of years, but in this case the time period was not disclosed. "We never looked at it as an exit strategy. We still see it as our brand," Mr. Shanks said.
"[Dentsu is] global, they have a good reputation, but are a relatively small network. It's no WPP. We're not looking at being one of a stable of 20 or 30 agencies," Mr. Shanks said. "We want to expand, and at the same time maintain as much autonomy as possible."