Another independent Canadian advertising agency has been acquired by one of the top multinational holding companies, as advertising clients demand a greater variety of services and a more global reach.
Toronto-based john st. announced on Monday that it has reached a deal to join WPP, the U.K.-based network of companies that also acquired Canadian agency Taxi in 2010.
"Clients are looking for the independent agency brands – like a john st., like [Omnicom-owned] Juniper Park – and they like the attitude that comes from those brands. But they need the depth of services that agencies within a network can provide," john st. CEO Arthur Fleischmann said in an interview.
Montreal-based agency Bos cited similar reasons when it was acquired by Tokyo-based Dentsu Inc. this past June. Claude Carrier, now president of DentsuBos in Toronto, said at the time that independent Canadian agencies have generally not been able to take advantage of expanding markets such as China.
Mr. Fleischmann echoed that on Monday, citing an unnamed global client who had recently discussed expansion into China as a major priority.
"As an independent agency, I couldn't help them with that," he said.
He also cited other network resources, such as partnerships with agencies in Quebec, media planning and buying services, public relations, and other client services that would be financially difficult for an independent to build from scratch. John st. now has access to those resources through WPP.
The agency has no plans to move locations, change its employee structure, or alter its leadership, he said. Acquisition by a multinational company is fairly typical in the lifespan of an independent Canadian advertising agency. However, while these types of multinational deals are often seen as an exit strategy for entrepreneurial advertising executives to retire after having built their own firms, Mr. Fleischmann said the john st. management has agreed as part of the deal to remain with the agency. He would not say for how long, beyond citing it as a "very long-term deal."
The deal with WPP is designed so that, apart from its financial reporting structure, the agency is left to manage itself as before.
"We said, 'no, the only thing we'd really be interested in is being left alone,'" Mr. Fleischmann said of the negotiations.
"As our clients are getting bigger and more complex – and prospective clients are getting bigger – we need resources we can't get in house," he said. "…This will give us the best of both worlds."
WPP employs 165,000 people and owns communications, media and advertising agencies in 110 countries. It reported $16.5-billion (U.S.) in revenue last year. In Canada, the company employs more than 2,500 people through agencies such as JWT, Taxi and Ogilvy, and had revenues in Canada of roughly $450-million (U.S.) last year.
In a statement, WPP said the deal allows it to expand its presence in Canada, and that the company is committed to broadening its reach in "mature economies" around the world.
John st. has received global attention for some of its campaigns in recent years. Last September, it's work for Rethink Breast Cancer was named one of the global "ads worth spreading" at the high-profile TED conference in California. The humorous campaign won women's attention with a video of hunky, half-naked men demonstrating breast self-exams, and a mobile app with those same men reminding users to do their exams.
And their series of videos poking fun at the advertising industry itself have been shared internationally, and have even helped to land the agency pitching opportunities with clients beyond Canadian borders.
John st. has roughly 100 employees and the private company had unaudited revenues of roughly $14-million in 2012, according to the statement.
Editor's note: WPP is based in the U.K. and had revenue of $16.5-billion (U.S.) last year. This online story has been corrected from an earlier version.