Analysts urge WPP: buy data firms

While WPP boss Martin Sorrell insists the Publicis Omnicom merger will not force him to go on an acquisition spree, some analysts have argued that he should expand the group’s data services to take on the new marketing giant.
Sorrell has played down the need for WPP to respond, saying it would still lead the European and Asian markets and the deal would only create significant scale in the US where regulators would “take a good hard look at that”.
But Bernstein Research analysts have claimed that Sorrell is a “sophisticated thinker who may well look elsewhere”.
They argue that WPP should expand further into data services and consumer insight by targeting market research companies such as Nielsen, GfK or Ipsos. A deal with one of the large software groups was another option, Bernstein Research said.
More than 25% of WPP’s £10bn-plus in annual revenues already comes from what Sorrell calls “data investment management” for clients, and it has a number of dedicated data divisions.
Last year, the group’s global direct, digital and interactive agencies – including OgilvyOne and Wunderman – showed continuing strong growth, with like-for-like revenues up well over 7% for the year. This sector showed strong margin improvement, with reported operating margins up 1.9 margin points to 14.3%.
Yet, so far at least, WPP insists it will grow organically, picking up clients and staff that fall out of the mega merger, and by pursuing its four-pronged strategy of focusing on faster-growth countries, digital business, consumer insight and pushing its divisions to work together.
“There are massive opportunities for us to grow organically,” he maintained.

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