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WPP is merging two of its leading agencies, AKQA and Grey, to form AKQA Group.

WPP, the world’s biggest agency group, confirmed the news after being approached by ��������pk10 and is telling staff today (11 November).

Bringing together digital shop AKQA and creative network Grey fuses two different disciplines, following a pair of similar internal mergers in 2018 when WPP united Wunderman and JWT to form Wunderman Thompson and VML and Y&R to create VMLY&R. It also brought the sub-brands of Ogilvy under a single P&L in 2017.

"Grey is renowned for creative storytelling and global brand-building at scale, while AKQA is celebrated for its world-class innovation and��experience design��skills," WPP said.

The merger will create��an “industry powerhouse” that “offers clients��outstanding creativity,��innovation and brand-building at global scale”, the company said.

“It will provide a full range of brand experience capabilities across all communications platforms, strengthening the skills and��services of both companies��for clients.”

The decision to name the enlarged business as AKQA Group means the end of the Grey brand – one of the oldest and most historic agency brands, which was founded in 1917 and acquired by WPP in 2004.

Ajaz Ahmed, chief executive of AKQA, who founded his agency in 1994 and sold it to WPP in 2012, will become chief executive of AKQA Group – even though Grey is a larger business.

Michael Houston, chief executive of Grey, who became only the agency’s fifth leader in 100 years in 2017, will become president and chief operating officer of AKQA Group.

Ahmed and Houston “will partner to lead the group”, which will employ 6,000 people in more than 50 countries, WPP said.��

It is thought the AKQA and Grey agency brands will co-exist for some time.

The two companies released an image to illustrate the merger, showing two explorers –��one in black to symbolise AKQA and the other in red to signify Grey��–��walking together towards a starlit mountainscape.

'You can’t be trapped by your heritage'

Mark Read, the chief executive of WPP, dismissed suggestions that the tie-up amounted to an AKQA takeover of Grey.��

“It is not in any way a takeover,” Read said, speaking alongside Ahmed and Houston in a joint interview with ��������pk10.��

“It’s about bringing together complementary clients and capabilities and people.”

AKQA and Grey already share one significant client, Volvo, and have little client conflict.

Read said WPP chose AKQA Group as the agency brand because “we felt it was better to have a singular name”, rather than going through “linguisitic machinations” to create a name that combined elements of both.

When rumours of an AKQA-Grey merger were first mooted in 2018, industry observers joked about creating “Grey-KQA”.

Read acknowledged that dropping the Grey brand was significant but he said the pandemic has focused minds.

“It is the time to make bold decisions and to put to some extent legacy to one side,” Read said. “You have to respect your heritage but you can’t be trapped by your heritage.”

Ahmed��said: “Our goal is to expand horizons, combining the curiosity, ambition, imagination and pioneering spirit of a start-up with the reach of a global enterprise.��

“This is an unparalleled opportunity for AKQA and Grey to bring our shared assets to life��into a modern, creatively-led company, building upon our inspiring and useful work to create value for our clients,��people��and communities.”

Houston said: “This exciting new partnership begins with what consumers expect, clients value, and brands need.��

“Forming a new company��that can deliver culture-driving ideas through technology at speed and scale is a potent proposition for our clients, large and small, and will allow us to offer the most powerful creative solutions in the industry.”

Financial pressure

Lawrence Valenstein and Arthur Fatt founded Grey in the United States in 1917 and chose the agency’s grey name because of the colour of its office walls. Grey London temporarily changed its name to Valenstein & Fatt in 2017 to honour the agency's Jewish founders.

Grey Group went on to become one of the world’s biggest agency groups with big-name clients such as Procter & Gamble and it built a large media-buying subsidiary, which became MediaCom.

WPP acquired Grey Group for about $1.5bn in 2004.

Asked how he felt about the end of the Grey name, Houston said: “What’s important to me is the continuation of the type of work that we do for our clients and the focus on creativity.

"Grey has evolved many times over its 103-year history and this is the next wave of the evolution.”

Ahmed co-founded AKQA in 1994 in the early days of the first internet boom and named the agency after his initials.

He remained chief executive after selling the agency, and top clients have included Nike.

WPP’s revenues have been in decline since 2017 and the group, which was built through acquisition by Sir Martin Sorrell, has been under pressure to simplify its operations and reduce debt.

Read, who replaced Sorrell as chief executive of WPP in 2018, has merged a string of businesses and sold off others, including a majority stake in Kantar.

Read said��in August that coronavirus was accelerating pre-existing trends and clients are looking in particular for agency partners that can offer “really strong creative work integrated with a very solid understanding of technology”.

He added: “We have seen a tremendous change in the work and types of questions that clients ask us in the last three years and the last six months have accelerated that tremendously. The notion that the 30-second television ad is the centre of what we do has clearly gone.”

WPP has not said much about the performance of AKQA and Grey in recent quarters, although it described AKQA as a “relative out-performer” in Q2 when all of the big agency groups reported plunging revenues during the worst of the pandemic.

VMLY&R was the strongest performer of WPP’s creative agencies in Q2 and Q3, which the group indicated was evidence that the merger has worked.

Ahmed said both AKQA and Grey are currently hiring staff.

Some of WPP’s rivals such as Dentsu have also been merging agencies.