WPP Buys Midwest Agency VML

British marketing services conglomerate WPP Group plc is continuing its buying spree with the acquisition of VML Inc., an agency specializing heavily in interactive advertising.

The Midwest shop now becomes a wholly owned subsidiary of WPP, one of the world's leading agency conglomerates whose group-wide billings exceeds $67 billion.

Terms of the sale announced Friday, were not disclosed.

“Primarily, what we saw in the marketplace as we worked on online clients [is that] more and more they looked for global reach and to do that as a total independent is very difficult, especially if you're trying to cross cultural barriers,” said Scott McCormick, co-founder and president of VML, Kansas City, MO.

VML posted billings last year of more than $114 million. Billings this year are projected to reach $135 million.

The agency's portfolio includes clients like Payless ShoeSource, Sprint Corp., American Express Co., AMC Theatres, Bayer, Coca-Cola Co. and Alamo Rent-a-Car/National Car Rental.

This acquisition will not result in any employee, client, office or name changes, said Matt Anthony, CEO of VML.

“An important consideration, and frankly the reason it took us a year to evaluate the opportunity, was that Scott and I wanted to make sure that we retained our culture and independence [after VML's sale],” Anthony said.

He said agency employees and clients were approving of the deal. The top executives have also signaled their continuing commitment to the 9-year-old shop.

“Scott and I have signed six-year agreements [to stay on at VML],” Anthony said. “That was a mandate from WPP. They're buying us for who we are and what we've built.”

VML becomes part of WPP's specialty communications division. WPP owns such agency brands as Ogilvy & Mather Worldwide, J. Walter Thompson Co., public relations firm Hill and Knowlton, and Young & Rubicam, which it bought last year.

Key attractions for WPP were not only VML's business model that integrated online and offline marketing for clients, but also the agency's low employee turnover. Geography also played a role.

“If you consider other alternatives, our Midwestern location was certainly a consideration,” Anthony said.

The acquisition is in line with two industry trends: the gobbling of smaller shops, interactive or traditional, by agency conglomerates like WPP, Interpublic Group of Companies Inc. and Omnicom Group; and the apparent inability of interactive agencies to stand on their own feet.

McCormick stressed that VML's deal with WPP was not a distress sale.

“It's counter to that trend,” McCormick said. “This is a growth strategy for VML, it's not our exit or survival strategy, by any means.”

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