WPP Doubles Down On Digital, Buys Leading Agency AKQA At $550M Valuation

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WPP today has announced a major development in its strategy to have 40 percent of its business coming from digital in the next five years: it is buying AKQA, one of the biggest — and independent — digital agencies around. WPP says that AKQA will continue to operate as an independent agency, and its current chairman will also head up a new investment arm, WPP Ventures, to back more digital marketing startups.

The financial terms of the deal were not disclosed in the release, but the Guardian is reporting that this is actually a majority stake that values the company at £350 million ($550 million). Since 2007, AKQA has been majority owned by private-equity firm General Atlantic, one of the sellers in this deal. AKQA had assets totaling $282 million as of December 31, 2011, and projects revenues of $230 million for 2012,  some $100 million more than its $189 million in sales in 2011. It employs 1,160 people across offices in San Francisco, New York, Washington DC, London, Paris, Amsterdam, Berlin and Shanghai.

Although WPP itself has been growing its digital business organically — last year it made about a quarter of its revenues from digital, or $4.8 billion out of a total $16 billion in sales — this is a strong step to grow that in a more turbo fashion. It comes on the heels of other investments, including leading a $10 million round of funding for mySupermarket, an online shopping/aggregation service.

AKQA was founded in 2001, and while a number of other agencies have been snapped up, or created within, the big-four ad giants, AKQA had managed to remain independent, and through that continue to land huge accounts, including Google and Microsoft Xbox among tech brands (one Xbox campaign shown here); and Delta, Diageo, EDF, GAP, Nike, Target, Unilever and Virgin Money, among others.

AKQA is an innovative agency in that it’s been not only working on campaigns on a creative level, but have been innovating on a technology level, asking what can be done in marketing and advertising in the digital format. It’s been particularly strong in mobile advertising — one project, with MTV, created a social bridge between the TV channel’s mobile app, the main channel and its website — a first-time example of such an initiative.

As part of AKQA’s intention to remain independent and a standalone brand, the founder and CEO, Ajaz Ahmed, and Chairman Tom Bedecarré wil remain on board. Bedecarré takes on a new additional role as president of WPP Ventures, a new Silicon Valley-based company, “which will explore new digital investment opportunities for WPP as a whole.” More info on that new VC vehicle to come, WPP says.

“We are thrilled to welcome AKQA’s unique team of technological innovators and entrepreneurs to WPP. We have admired their creativity and technological skills for a long time along with their outstandingly effective and award-winning work for clients,” says Sir Martin Sorrell, CEO, WPP, in a statement. “We are looking forward to working with Ajaz and Tom to broaden their offer and our own, both geographically and functionally.”

For AKQA this represents a new way of injecting capital into the company to devleop its digital initiatives and work even further: “With increased resources and access to new geographies, our partnership with WPP will fuel the next level of energy, excitement and opportunity, delivering innovation and creativity at scale,” said Ajaz Ahmed, in a statement.