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Advertising giant WPP has acquired Gloo, one of South Africa’s largest digital agencies, through its flagship marketing communications network Ogilvy & Mather.
Gloo has made a serious name for itself since its founding in 2005, winning multiple awards and nailing down big-name clients including FNB, Microsoft, the Discovery Channel and British Airways.
The digital agency’s audited revenues for the financial year ended June 2014 were ZAR 70.5 million with gross assets as at the same date of ZAR 27.5 million.
Ventureburn sources had confirmed some time ago that Gloo’s majority shareholder Kagiso Media was interested in offloading its stake in the company. Ogilvy was always believed to be the preferred buyer, with our sources reporting frequent meetings between the two.
When we contacted Gloo founder Pete Case earlier this year however, he fervently denied that any deal was in the works, suggesting that the meetings concerned a joint venture between the two companies.
“One of the problems with being a company like ours is that we’re in and out of lots of agencies,” he told us at the time, adding that “there are certainly lots of acquisition talks in the industry right now, but nothing from our side”.
Read more: Gloo CEO quashes Ogilvy acquisition rumours
“The marketing communication landscape is shifting towards an integrated future, where digital is no longer a separate silo. For us as a company, it radically changes how we deliver communications solutions to our clients in a world where platforms and channels have converged. Consumers across the continent are increasingly nimble in how they move between platforms, and it is critical that the solutions we offer our clients are scaled to capitalise on this effectively. This transaction will allow us to introduce our latest House of Dynamic Content offering effectively into the South African market,” Ogilvy & Mather SA chairman, Nunu Ntshingila-Njeke said in statement.
Case meanwhile now says that the two companies make an ideal fit.
“A partnership between the leading communication agency group and the leading digital agency was very attractive, it represents the step-change required to build brands in a truly integrated way,” said Pete Case, founder and CEO of Gloo Digital Design. “With the fast increasing number of digitally enabled consumers and the need for all organisations to communicate with them holistically, we feel this transaction best places us to produce media agnostic solutions for our clients and their consumers – as well as pure play digital solutions where required. There is huge evidence to show that Gloo and Ogilvy are both ambitious, creative companies and we feel the culture fit is excellent.”
At this stage, it’s also unclear exactly how much the deal is worth. We are however starting to get an idea of how the deal has been structured. From the statement put out by Ogilvy however, it seems that while Kagiso has sold the majority of its stake in Gloo to Ogilvy, it appears to have retained at least some stake in the company.
Mark Harris, Group CEO of Kagiso Media, which sold a majority stake in Gloo said, “We look forward to collaborating with Ogilvy & Mather in the future.”
Operationally meanwhile, Case will take up a central role in O&M SA as co-Chief Creative Officer. Other senior employees at Gloo Johannesburg will take up positions across the agency and its digital and CRM business, OgilvyOne Worldwide SA.
Subsequently, and on completion of the deal, O&M SA plans to physically absorb Gloo into its Johannesburg office and will form part of an internal technology and innovation hub to the 15 companies within the O&M SA Group.
Gloo Cape Town however, will continue to operate as an independent and separate digital specialist, with the added resources of the groups’ international innovations lab to accelerate its focus on leading-edge technology and innovation.
The two companies appear to have gone all out on the acquisition, with the launch of an Ogloovy website explaining the acquisition.
The acquisition is just the latest in what is proving to be an increasingly lucrative market for WPP. Earlier this year, it acquired Quirk in a deal believed to be worth around R400-million.
Read more: WPP to acquire digital agency Quirk
In South Africa, the Group (including associates) generates revenues of around US$500 million and employs around 26 000 people. Across the continent of Africa, the Group (including associates) collectively generates revenues of around US$650-million and employs 28 000 people
In acquiring Gloo, it’s managed to get its hands on an agency that has an especially strong reputation come awards time. Gloo has been named Digital Agency of the Year, every year for the past seven years, by Financial Mail’s AdFocus Awards.
Bringing it under the Ogilvy umbrella is an interesting move, given that its only very recently that it’s managed to outline its own digital strategy in the country with operations such as Olgilvy One and Neo having launched within the last year or so (in South Africa at any rate).
That said, mobile specialist Strike Media has been reporting into Ogilvy One ever since Ogilvy acquired a 60% stake in the company in 2013.